Mobile
Mobile is dead, continued
Friday - January 09, 2009
I wrote about the death of mobile application investments a while back and the recently leaked e-mail (posted by Tech Crunch) from Tapulous shines more light on those unattractive economics for investors. Investing in the Long Tail of content (the games category) is not a good idea.
Now I want to preface that selling 100,000 copies of a game is a great accomplishment (good job Bart and thank you Apple), but the $1M or so this very popular game generated can hardly be called a venture funded business that is going to emerge with a billion dollar market cap anytime soon.
Here is what needs to be accomplished to generate a little over $1M:
- #1 most popular game for iPhone & iPod touch for 2008
- #3 most popular app overall for the US
- 5 million unique installs on Tap Tap Revenge! (that doesn’t double-count when a user upgrades TTR)
- 100,000 paying customers
So, if being the #1 most popular game on iPhone means you make $1M, I can’t see how:
1/ This initial success is going to continue with an avalanche of other attractive games entering the market
2/ The company is going to be able to produce a consistent stream of similar “winners”
And so here is another example if subprime investing, this time provided by a long tail of angels.
Tap Tap Tap.
Mobile is dead, for VC that is
Friday - July 11, 2008
With the proliferation of the new iPhone, Mobile Applications as a viable VC investment category is dead.
Companies like Digital Chocolate (founded by software gaming pioneer Trip Hawkins) are now painfully aware of that. Recenty switching gears, it is debatable whether they can compete with the endless supply of a new free-market.
The future of many companies like Aeroprise, still basking in the glory of a proprietary Blackberry environment and tucked away in the enterprise mobile markets, will be severely threatened by standards-based technlogy running on any internet capable device, very soon.
The premium market of mobile applications protected by walled gardens has been changed to a free-market by Apple’s iPhone and the App Store. Macro-economics, discussed in this blog many times before, at work again.
Rather than single minded companies being able to protect their turf with a collection of proprietary applications (usually aimed at businesses), now individuals will start to create applications for other users. By the people, for the people. N/N :the airplane code for Steve Jobs’ Gulfstream. Get it already?
User-generated-content (one of those awkward Silicon Valley attempts of describing content that resides in a free marketplace) has a brand new companion, it is called: applications.
But these applications are no longer mobile applications, they are internet applications - that happen to run on a great mobile internet device. And they will run on many other internet devices, hard-wired or mobile. Think of them as the big brother of widgets, task oriented applications that remove the need to use a browser to benefit from the Internet. They target regular consumers, not internet savvy technologists and they self-configure, based on location and other user preferences.
So the investment model for mobile has changed dramatically and the recently announced $100M iFund (by top investment firm KPCB) and a similar one by BlackBerry - the vehicle of purportedly investing $1M per application vendor - makes no sense at all. Here is why:
1/ User-generated content does not provide a great foundation for large upside - let alone an acquisition or IPO that is priced to produce interesting VC returns.
2/ The value to the VC is in the “winner-takes-all” platform, not the content (albeit that produces great value and choice to the consumer). Apple, with the App Store platform for distributing applications using free-market principles (although still not perfect, check out our marketplace rules) will again walk away with the same benefits it reaped from the iTunes store, direct and halo.
3/ Application development is a very high cost business, especially in a highly competitive marketplace. The gaming industry wrapped in a slower transition from premium to free-market is finding that out too.
4/ Mobile used to be a proprietary, and protectable, path to the internet. No longer. The intelligence of the backend service, accessed through a mobile of hard-wired computing device is where the value is.
So, i suggest to rename the iFund in Software-As- A-Service fund, agnostic to access paradigm.
Nokia and Blackberry (RIM) will have to follow quickly. But they would need to start hiring people that understand macro-economics, not just technologists that create poor copies of Apple’s implementation.
All phones need to have a real operating system inside, and Roger McNamee’s investment in Palm may make sense in that way, but they better step it up quickly. Nokia is off playing with Symbian, Microsoft has its own concotion. All of them pretty much asleep at the macro-economic wheel.
Yet for individuals, on the supply and buy side, all this disruption leads to new opportunities that are derived from a meritocracy. Fantastic applications are being developed and used in massive numbers. The world is indeed flat after all.
BlackBerry just got a make-over (by Cingular)
Thursday - July 27, 2006
Did Cingular read my my rant about the ugly designs of Blackberry? The new 7130c from Cingular (not to be mistaken with the still ugly 7130 from other carriers) comes closer to what modern design for a PDA-with-phone should like like.
Having tested a ton of phones, PDA's etc over the years, the 7130c is a very attractive competitor to the bulky Palm Treo 650 and ... certainly more usable. The small dimensions of the 7130c cuts the size of the older Blackberry almost in half, a little thicker than the Motorola RAZR (which I love) and a bit taller, the 7130c still fits in the pocket of my pants easily. I like it so much, that I decided to get rid of my old Blackberry (on eBay) and my RAZR (although I'll keep it around, just in case) and combine two capabilities into one.
The 7130c with EDGE internet connectivity is actually fast enough to make it a delight to browse the internet (and visit the WAP site of CNN) and read e-mail, while waiting for the traffic light to turn green. The industrial design is good enough (not great) and appealing, the screen that is clearly visible in bright sunlight and adjusts automatically to your surroundings. This is absolutely the best screen I've ever seen on a mobile device.
Phone services are integrated into the PDA capabilities, but this part could be more intuitive. The heritage of the scroll menus from the Blackberry PDA platform complicates things beyond what is necessary. More 'special purpose' buttons would solve the problem. For now however, the Blackberry 7130c has become my new one-eyed king in the land of the blind.
Blackberry needs a new industrial designer
Monday - April 17, 2006
Apple's latest Aperture software personifies how the technology industry fuels its own growth by creating new software that drives new incremental hardware requirements. Managing an increasing library of 16,000 photographs is what I do when I am not working or playing with my family. And when Apple's Aperture came out late last year, I jumped on the promise to manage those assets (or liabilities in some cases) more effectively. While I had the bottom-of-the-barrel of Aperture's hardware requirements, a not so shabby 1.5Ghz Powerbook, the expansion with 2Gbytes of memory and a 160Gbytes replacement hard-disk seemed a foregone conclusion. But not so fast, Aperture's performance that is. Even this configuration leaves you yearning for a large flat-panel, so the windows and photographs can be displayed in sizable fashion and with the clarity they deserve. An Intel Dual-Core wouldn't hurt either.
The bottom-line is, a two year old, top-of-the-line Powerbook is suddenly on its last leg. I can only wonder what upcoming updates of Microsoft Office, Adobe CS3, Dreamweaver and others will do to my geriatric Powerbook. Desktop software is still an important catalyst, fueling new hardware replacements in a slowing PC market. Software and services will live alongside each other for quite some time, in the interest of PC manufacturers and admittedly, end-users.
Tips for Aperture enthusiasts:
Two tips that will smooth a transition and took me two months to figure out: 1/ Remove all videos from the iPhoto library, Aperture will abort, in my case after 14 hours, if you don't. 2/ De-fragment your hard-drive after a successful import, or simply copy the main Aperture library to a backup disk, remove the original and copy it back. The Aperture import process fragments the library dramatically; I ended up with a Library of over 6,000 file fragments, absolutely killing performance.
The brains are in the service
Monday - April 10, 2006
By Georges van Hoegaerden
Recently I was asked to think about how to improve the phone features and functionality in an ever commoditizing "Terminal market" (an Ericsson acronym). There is a lot at stake here; lots of people buying phones, 2.2B of them to be exact, not enough of them buying the associated internet service.
Improve the specs and make it look good is the easy answer to that question. That is, if you are building a phone not a PDA. In a PDA you can pull technology, services and memory into a bulky enclosure and rely on nerdocrats to buy them; not a large market. So how do you build a phone that is just as smart and fits in the enclosure of a RAZR? Or smaller? Research shows that people buy cool looking phones, rather than bulky ones stuffed with functionality.
The answer in my view is services. Just as the power of the iPod stems from the iTunes library on your desktop connected to the iTunes store, phones should become re-play devices to services provided on the backend. The phone should be an iPod geared towards managing and replaying service data; contacts, calendar items, music, news are pushed out to it automatically, pictures are taken, stored and uploaded automatically to your section of the "store", ready to be shared and, yes, sold. Enabling free market principles to the content distributed by these services, completes the value chain and drives growth of the platform, regardless of phone.
Phone manufacturers need to learn how to build a value chain, not just a phone. Business innovation is just getting started.
Recently I was asked to think about how to improve the phone features and functionality in an ever commoditizing "Terminal market" (an Ericsson acronym). There is a lot at stake here; lots of people buying phones, 2.2B of them to be exact, not enough of them buying the associated internet service.
Improve the specs and make it look good is the easy answer to that question. That is, if you are building a phone not a PDA. In a PDA you can pull technology, services and memory into a bulky enclosure and rely on nerdocrats to buy them; not a large market. So how do you build a phone that is just as smart and fits in the enclosure of a RAZR? Or smaller? Research shows that people buy cool looking phones, rather than bulky ones stuffed with functionality.
The answer in my view is services. Just as the power of the iPod stems from the iTunes library on your desktop connected to the iTunes store, phones should become re-play devices to services provided on the backend. The phone should be an iPod geared towards managing and replaying service data; contacts, calendar items, music, news are pushed out to it automatically, pictures are taken, stored and uploaded automatically to your section of the "store", ready to be shared and, yes, sold. Enabling free market principles to the content distributed by these services, completes the value chain and drives growth of the platform, regardless of phone.
Phone manufacturers need to learn how to build a value chain, not just a phone. Business innovation is just getting started.
Bye, bye Treo and Palm
Friday - September 30, 2005
Last week I bought a Motorola Razr to replace my Treo650. It is beautiful, highly functional and tiny, and folds open to something substantial in my hand. The Razr synchronizes all business data from my Apple Powerbook wirelessly over Bluetooth, including most contacts and calendar appointments. At a quarter of the size, and a third of the price of a Treo it keeps me just as informed. No wonder Motorola sold 6 Million of them. Lucky Ed Zander, Motorola's CEO who rolled into Motorola (from Sun) after the Razr had already been conceived.
Apart from previous comments in this blog about the Treo with regards to UI, target market etc., the Treo's bulky form-factor (which still reminds me of the old Ericsson, pre-Sony phones) with its pointy antenna, really started to bother me. I felt like a cop patrolling the neigbourhood with a gun in its holster.
But the real reason for my change is a strategic one. I lost confidence in the Palm (Source) platform and so apparently has Palm's CEO. The announcement of the Treo700 based on Windows Mobile has reduced Palm to a commodity hardware player with not much to be proud of. Owning and refining the Palm OS and segmenting it to identifiable target markets would have been the winning business strategy.
Amazing is the power and persistence of Microsoft who now delivers the Windows Mobile version on PDA phones from Motorola, Sharp, Samsung, HP and other brands, steadily repeating its Windows PC software success downstream. I am eagerly awaiting Apple's foray in the phone OS business.
Treo650: In the land of the blind, the one-eyed is king
Thursday - May 26, 2005
By Georges van Hoegaerden
As a fervent Macintosh user (I have never bought a Windows PC in my life, but been "forced" to use one), the Treo650 is about the only game in town to get your office with you on the road. The success of the Palm in 1997 started with a simple concept, provide business users with four simple buttons that gives them access to everything they need. No more, no less. Since then the Palm platform has grown in all directions, except the one I need; better support for the business user. I like access to e-mail and a decent browser, I don't like the fact that many of the phone software capabilities are not truly integrated with the original Palm software capabilities. Bluetooth performance of the Treo is below par, calls sometimes do not get sent to the Treo headset, regardless of the button you press (the headset works fine with my Powerbook and Skype). Categories don't work with the Mac. Call log can't be scrolled through using navigation keys. No keystroke consistency between applications. No global hot button consistency. Inconsistent user interface behavior between applications. Should I go on?
Opinion: I wish Apple made a phone, using a proprietary device that serves the needs of a business user very well (a key target considering its $500 price point) , instead of trying to appeal to a broad software market. In the same way the iPod did that for music players. Proprietary platforms competing with "open-source" will yield better customer value, Apple please bring it on.