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State of Mobile Computing

  1. 1. Alex Ferrara, June 23rd, 2010<br />Mobile Computing Roadmap<br />Confidential<br />
  2. 2. 1<br />Agenda<br />State of Mobile Computing<br />Potential Investment Opportunities<br />
  3. 3. U.S. Wireless Industry is Large and Mature<br />Almost everyone in the U.S. has a cell phone<br /><ul><li>U.S. wireless penetration at 91% exceeds U.S. PC penetration (~80%)</li></ul>Soon, everyone in the U.S. will have a Smartphone<br /><ul><li>Smartphone adoption forecast of 20%+ CAGR</li></ul>Source: ctia.org, Forrester<br />
  4. 4. Three self-reinforcing trends are driving global adoption of mass mobile computing:<br />Moore’s Law continues to drive performance/price improvements in smart phones, netbook PCs, and tablet PCs making them increasingly affordable<br />3G telecom network roll-outs have enabled mobile broadband applications<br />The massive success of the iPhone has broken the carrier walled garden and created competitionamong platforms<br />Smart phone adoption has reached a tipping point; network effects now maintain momentum<br /> Why now? Mobile Computing in a Post iPhone World<br />
  5. 5. With iPhone, Apple introduced a new mobile computing paradigm that consumers and competitors have embraced<br />4<br />User Interface Evolution Over Past 30 Years<br />Text<br />Touch<br />Graphical<br />User Interface<br />Keyboard<br />Fingers<br />Mouse<br />Input Device<br />Consumers now have in their pockets:<br />Fast processor Larger memory High-res screen Broadband Internet Camera GPS<br />Multi-touch UI Magnetometer Accelerometer Wifi & Bluetooth Good battery life<br />Source: Morgan Stanley, T-Mobile<br />
  6. 6. 12minutes<br />33minutes<br />28minutes<br />27minutes<br />This is paradigm is more about data, apps, and content than voice and SMS<br />Daily Usage Breakdown<br />% of Mobile Users Who Consume Digital Content<br />65%<br />Average iPhone user spends50% more time per day, 20 minutes, using device<br />All that extra time is spent on data features and apps<br />48%<br />21%<br />Smart phone consumer value is more about data than voice<br />Source: Morgan Stanley, iSuppli, CTIA, comScoreMobiLens<br />
  7. 7. Mobile Internet<br />NTT docomoi-mode<br /> Launched 6/99<br /> … and it has been a tremendous success<br />iPhone + iTouch vs. NTT docomoi-mode vs. AOL vs. Netscape Users<br />First 20 Quarters Since Launch<br />~85MM<br />Mobile Internet<br />iPhone + iTouch<br /> Launched 6/07<br />Desktop Internet<br />Netscape*<br />Launched 12/94<br />~31MM<br />~18MM<br />Desktop Internet<br />AOL*<br />v 2.0 Launched 9/94<br />~8MM<br />Note: *AOL subscribers data not available before CQ3:94; Netscape users limited to US only. Morgan Stanley Research estimates ~50MM netbooks have shipped in first 10 quarters since launch (10/07). Source: Company Reports , Morgan Stanley Research.<br />Source: Morgan Stanley, Katy Huberty<br />
  8. 8. One implication is that what were devices are becoming features<br />7<br />There is (or will be) an app for that<br />Source: Qualcomm<br />
  9. 9. … and unlike the desktop, consumers are willing to pay for apps and content<br />8<br />Wall Street Journal<br />10,000 paid app iPad installs @ $17.29 per month in 60 days<br />$3.3m in total annualized revenue ($2.1m subscription + $1.2m in advertising)<br />WSJ.com, a decade-and-a-half old subscription site, has about 400,000 online-only subscribers<br />In two months the iPad has added 2.5 percent to that number. <br />The Times of London<br />5,000 copies sold in the first 3 days @ £9.99<br />£49,950 in first 3 days<br /> Early but promising<br />Source: Graphic by Tom Fishburne<br />
  10. 10. How will the paradigm evolve? Looking to analogs<br />Analogous Market Growth Patterns<br />We are roughly here<br />><br />><br />><br />><br />><br />><br /><ul><li>With mobile infrastructure adequately developed and Apple as a platform pioneer, activity is increasing among platforms and applications
  11. 11. Mobile Commerce may be around the corner</li></ul>Source: Morgan Stanley Research<br />
  12. 12. How will this paradigm affect the wireless value chain?<br />10<br />New Platforms<br />(iPhone, Android, Blackberry, MS)<br />Consumers<br /><ul><li>Value is shifting from carriers to new consumer-centric platforms which disintermediate carriers’ “walled gardens”
  13. 13. Consumers face unprecedented choice of mobile applications and content
  14. 14. Today the value is accruing to consumers and platform vendors
  15. 15. As platforms become more open, value will accrue to consumers</li></ul>Source: Adapted from Anderson & Williams, “Unbundling the Mobile Value Chain”<br />
  16. 16. Evidence Seen in the Success of App Ecosystems<br />Source: Morgan Stanley, Distimo, Nokia, Apple, Google, RIM, Nielsen<br />Nokia apps exclude wallpapers and ring tones<br />RIM/Nokia excludes older devices that cannot support App stores<br />
  17. 17. … and in Apple’s stock price performance<br />5 Year Dividend Adjusted Stock Price:<br />Apple, Google, Microsoft, Palm, RIM, Nokia, AT&T, Verizon, Sprint<br />Apple<br />+500%<br />Google, RIM<br />+100%<br />Everyone <br />Else<br />Market cap of Apple now exceeds that of Microsoft<br />Source: Capital IQ, May 25 2010<br />
  18. 18. … and in recent industry developments<br />2010<br />JAN<br />FEB<br />MAR<br />APR<br />MAY<br />JUN<br />Apple Ships 2M iPads<br />Google becomes <br />#2 smartphone OS<br />Android Hits 100k Activations per Day 18 Months After Launch<br />HP Announces Palm <br />Acquisition for $1.2b<br />iPhone 4 released<br />Ballmer Takes Over Windows Mobile<br />RIM & Intel Announce Separate Tablets<br />Industry Analysts Increase Estimates<br /><ul><li>53% CAGR for iPhone (2008 – 2013)
  19. 19. 23% CAGR for Smartphone (2008 – 2013)</li></ul>AT&T Ends Unlimited Data Plan<br />FTC clears Google/Admob<br />
  20. 20. Apple’s Success has Invited Competition<br />14<br />Worldwide Smartphone OS Market Share <br />by Sales Volume<br /><ul><li>Smartphone OS/Platform market remains concentrated but increasingly competitive
  21. 21. Android share has increased from 0% to 10% in 18 months
  22. 22. RIM and MSFT also making big investments
  23. 23. Winning platforms are consumer-focused with rich content and applications</li></ul>Source: Gartner<br />
  24. 24. While iPhone & Android Shipment Shares Remain Low, They Have a Disproportionate Share of Web Usage<br />15<br />Global Smartphone Share of HTML Mobile Page View / Mobile Internet + App Usage / Unit Shipments<br />Note: Net Applications collects data from ~160MM monthly visitors on mobile devices that render full HTML pages and JavaScript. Visits to WAP pages are excluded. <br />Source: AdMob Mobile Metrics Report (3/10), Net Applications (5/10), Gartner (Q1:10).<br />
  25. 25. Mobile Developers Face Important Considerations<br />16<br />Google Android<br />Advantages:<br /><ul><li>Native services and more open platform
  26. 26. Java and Eclipse IDE </li></ul>Considerations:<br /><ul><li>Hardware profile fragmentation
  27. 27. Smaller install base (for now)
  28. 28. Frequent OS updates
  29. 29. Fewer countries supported</li></ul>HTML5 Mobile Web<br />Advantages:<br /><ul><li>Open
  30. 30. Ultimately it will be necessary to support</li></ul>Considerations:<br /><ul><li>Not widely supported today
  31. 31. Lack support for native services (e.g. gestures, local content)</li></ul>Apple iPhone/iPad<br />Advantages:<br /><ul><li>Tight integration with native services and media library
  32. 32. Growing audience across many countries
  33. 33. Predictable platform release cycles</li></ul>Considerations:<br /><ul><li>Proprietary platform
  34. 34. Apple approval process
  35. 35. No Flash / 3rd party SDKs
  36. 36. Objective C
  37. 37. iAd Payment toll</li></ul>Android<br />May 2010<br />Source: Google, Admob<br />
  38. 38. Mobile Platform Competition and a Dynamic Ecosystem Create Opportunities for Innovative Startups and VC<br />Mobile computing growth is creating a land grab among Strategic buyers…<br />Mobile M&A Transactions Announced in Last 9 Months<br />17<br />… and generating interest among VCs<br />Financings in Last 60 days<br />
  39. 39. 18<br />Agenda<br />State of Mobile Computing<br />Potential Investment Opportunities (Redacted for Public)<br />
  40. 40. Mobile health<br />Mobile applications for eldercare<br />Mobile payments<br />Online video<br />Multi-device synchronization & staging (e.g. Evernote, Dropbox)<br />Retail/ecommerce<br />Mobile enterprise<br />Helping carriers avoid becoming dumb pipes<br />Potential Investment Opportunities (Redacted for Public)<br />
  41. 41. Thoughts or Comments?<br />Contact me at alex@bvp.com<br />Thank You<br />
  42. 42. Thank You<br />Confidential<br />

Notes de l'éditeur

  • 1. iPhone computing paradigm is as significant as Windows 3.0 and the WinTel monopoly was for desktop computing in 1990 and Mosaic/Netscape was for internet adoption in 1995All created new platformsConsumer have in their pockets.Immediate boot time, battery lifeiPhone 4960x640 pixels or 320 dpi is greater than anything on the marketGyroscope$199 price point3. Many new products have followed the same paradigm including Nexus One, Motorola Droid, HTC Incredible, Sprint EVOiPhone 3GS,600 MHz processor,256 MB RAM, 16GB – 32GB storage,480 x 320 pixels,3.0 Megapixel camera
  • Growth drivers include declining costs and feature set improvementsDays to reach 1m units iPhone and iPad are faster than blackberry (300), iPod (360), Netbooks (180)iPad took 60 days to hit 2m unitsiPhone has sold 50m units
  • First true mobile computing device
  • WSJ app is free to WSJ.com subscribers. WSJ has 64,000 of those.WSJ app is free and Apple only gets their vig if sold through App Store so no rev share with Apple for nowWSJ gets $400k for 4-month advertising deals
  • iPhone success has led to the rise of new platforms that are disrupting the mobile value chain 1.) Platforms are not coming from carriers but rather Apple, GoogleHow will this new paradigm affect the existing value chain?2 key points 2.) Value is clearly shifting to platforms. Carriers are generally on the losing end, but leading carriers may benefit from price elasticity effects as prices fall but volumes increase (kindle, iPad, other data devices) 3.)Open vs. closed. If/when platform become more open value will accrue to consumers
  • Apple generating $18bn in revenue from iPhone last year and $6.1bn in revenue from iPhone/iTunes/content in Q1. Total $50bn in revenue.Growth drivers include declining costs and feature set improvements40% of Apple’s revenue is now iPhone or iPhone related#2 product after Mac
  • Also worth noting that Google and RIM have performed reasonably wellApple has created $150bn of value, market cap of Google
  • Growth drivers include declining costs and feature set improvements
  • Explain #siPhone success has given Apple a lead but has also paved the way for competition and Apple’s “closed” model may be an Achilles heel. Apple has grown from 5% to 15% market share by sales volume.Android is experiencing rapid adoption and is now #2 platform after RIM. Android seeing 100k activations per day less than 18 months since launch.As competition increases among platform vendors the industry will move towards an open mobile web. Importance of HTML5.
  • Consumer usage patterns also imply further share gains for iPhone/Android
  • These are very different platformsBattle for developer mind share and most devs want to program for iPhone or Android or HTML5Itunes link provides benefits to iPhone, Android lacks a similar forcing functionAndroid is highly fragmented - 60 hardware platforms - More than 60% of Android users have v1.6 or earlierApple’s iTunes integration results in a smoother OS upgrade path - Only 5% of users have not upgraded to OS version 3.0 - 85% of iPhone users have one of the two latest OS
  • Admob was founded in 2007Quattro founded in 2006, series A in 2007Siri was founded in 2007Only 31 VC backed deals acquired in Q1, 2010 for $5.5bn, $900m via IPO (Venturesource)Boku has raised $38m in the past yearIt is a provider of infrastructure products that enable mobile operators to deliver multimedia services such as video, Internet access, voice-over-IP, e-mail, mobile TV, photo sharing, and gaming to their subscriber