So here’s the mother of all IPOs then, and it was coming a long way. The web was buzzing, today analysts of any couleur are commenting and reading through the fine print of Facebook’s registration statement (known as the S-1) in order to find valuable nuggets of information that they had not had before and myriads of bloggers and journalists drool over the new wave of young wealthy people in the Valley.
No mobile revenue
Whilst I’d love to join into this frenzy, I want to focus on one point in the S-1 that caught my eye, and which might pose some interesting challenges for the social networking giant going forward, namely the large abyss between mobile use of the site and revenues derived from it. You will likely have read about the huge amount of Facebook users regularly using the site from mobile devices. According to the company itself, 425m active users (out of a user base of 845m) accessed the site using mobile devices; that’s more than 50%. And yet, Facebook does not derive “any meaningful revenue” (quote from their S-1) from it.
Why (these) ads don’t work as well
This is, of course, because it – thus far – did not find a good way to display ads in their various guises to mobile users. The screen real estate is scarce and it would be easy to destroy the user experience by doing so. However, with that growth in usage, they may have to review this approach. The challenge is then to successfully marry user experience on a small(er) screen with revenue-generating activities. And, alas, the latter are so far mainly display ads of various sorts. How successful will those be? My guess is not very much. It is likely one reason why Facebook so far has shied away from using them: it might just destroy the user experience to an extent that its users would be seriously upset.
And yet, it is only the latest case of highlighting one of the common fallacies of migration from web to mobile (and I am not even saying they are wrong to move that way; their user growth and occuption of that space will likely counter-balance that; I think it was Accel’s Rich Wong who said that it is easier to find revenue streams once you have 100′s of millions of users than to find 100′s of millions of users with a (pre-)defined revenue stream). Nevertheless, none of us would watch a TV commercial showing you a static picture and someone reading something out from the off (this is exactly how TV advertising kicked off). We were not overly thrilled by early attempts of online advertising; they were merely an attempt to convert billboards and printed circulars to the digital realm. It was not until Google’s AdWords that online advertising really hit it off. So why would we now be content with a mere port from another form of media?
The Japanese way?
Japan has shown that there are other ways. Japan’s GREE reportedly records similar revenues from about 5% the user base than Facebook does. It does so mainly with virtual currencies and goods (and, yes, it has moved to a slightly different target market); users can customize their experiences within that social network by buying “stuff” to embellish their avatars, play, use, customize content, etc. Japan has always been something of the Galapagos Islands when it comes to mobile usage: what worked there didn’t often work elsewhere (anyone remember i-mode?). However, we are seeing a similar effect on smartphone applications: 65% of the top-grossing apps these days use some sort of “freemium” feature. This approach might be too late for Facebook now though. Its users would be up in arms would they start charging for features that users have come to see as free.
I am fairly confident that the good folks of Facebook are here to stay but I am still thrilled to see if, when and how they will begin to adapt. With all the very smart people in the company, we may just see the next wave of mobile monetization, and I wonder what it might be…
Things heat up, and not only because I am traveling South this week, more specifically to Dubai where, on Tuesday (1st), the Mindshare Media Summit 2011 will open its doors. It carries a heavy focus on marketing and media in a multi-screen world where screens and user experiences converge. The organizers have a great line-up of speakers, including:
- AKQA
- Nissan
- HSBC
- BBC Worldwide
- Yahoo!
- The MBC Group
- (of course) Mindshare
- The Arabian Radio Network
- and many more (including yours truly).
So if you would like to hook up in one of the most vibrant regions in the world, in one of the swankier settings and soak up some sun before the winter (if you live in the Northern hemisphere, that is), come by! 
A fairly wonderful conference will open its doors on 27 October in London, UK, namely Games for Brands, an event where we will do just that: investigate if and to what extent games may work for brands. Just speak to Barclaycard (their Waterslide Extreme game [done by Fishlabs] did more than 14m downloads on iOS) or Volkswagen (multiple games by Fishlabs [again]) for the Polo and others and a special VW Golf GTI edition of Real Racing by the recently acquired Firemint).
The event features a fairly cool line-up, too, including speakers from:
- Rovio (they of Angry Birds fame)
- Channel 4
- PlayGen
- BBC
- EMI
- King.com
- LoveFilm.com
- Tate
- Wellcome Trust (yes, they’re the Glaxo Wellcome guys)
- Aegon
- Matmi (they did games and apps for instance for Lily Allen, Gorillaz, United.com and Vimto – the seriously mixed-up fruit)
- and, yes, I will be talking again, too (but when don’t I?)
I also have a goodie for the readers of this blog: four of you can get a very special discount and attend for £95.00 only. Tempted? Contact me (either via e-mail or Twitter or through the contact form here).
It’ll be a good one, so come along!
This week, I will have the great pleasure to attend (and speak) at the NY Games Conference. If you are on the East Coast and into games, this is where you need to be. Join us! It’s worth it. There are speakers from:
- Ubisoft
- Samsung
- Majesco Entertainment
- Yesware
- Sony Computer Entertainment
- TAG Strategic (yes, Ted, the man himself!)
- Freeverse
- Greystripe
- Badgeville
- OnLive
- Atari
- EA Sports
- OpenFeint
- GameHouse/Real
- Sulake (of Habbo Hotel fame)
- Ogmento
- CBS Interactive
- Fremantle
- Wedbush (Michael Pachter himself!)
- Tapjoy
- RockYou
- Hi5 (yes, Alex St John will be there to delight)
- NVidia
- Wild Tangent
- GameStop
- MTV Networks
- and… me…
Add to this the formidable events for which Digital Media Wire are renowned, cool downtown NYC and nothing else going on that week (well, perhaps except F8), and you’re on for one hell of a gaming conference.
See you? See you!
Two months ago, I mused over handsets, packages, and the like. The reason was – if I may briefly recall – that my contract ran out. I reported on a number of options but never told what happened. Here’s what:
The Carrier
I hinted as much before: it is Vodafone who have me in their grip now. The data roaming rates did it (although they have fairly decent international rates, too, specifically with Vodafone Passport, which must be one of the first programmes where a large multi-national carrier leverages its geographical spread; T-Mobile, take note!).
The Handset
Quick recap: I was looking at device options (the contracts I tend to be on are unhealthily big, which normally gives you a free device on top of it, and why the heck not). Since I already have an iPhone (3 and 4), a Google Nexus and various Nokias, I thought what next? Do I try out another Android device? Do I give Windows Phone 7 a go? Or do I return to my old love, Blackberry. And the last one won me over. So I fell for it, and went with the brand-new Blackberry 9800 Torch. Touch screen plus QUERTY plus Blackberry e-mail. You should think that that’s pretty need and, really, all you could wish for (sorry, Microsoft, I didn’t dare – yet).
Trials and Tribulations
But, alas, it was not so. It turned out that two-odd years in the claws of the iPhone and Android had seriously spoilt me, also – and this was concerning – with respect to e-mail. I first learned that I could actually type pretty damn quickly on a touch keyboard now (better on the iPhone, less so on the Nexus), so the keyboard did not really do it. But that was not really it. The little things did it:
- Checking multiple e-mails at once so you can delete or file them all in one go? I’m sure there was one rather ingenious shortcut to do this but it was not very obvious and I had forgotten how it worked. Do I look it up on the web? Nah, it should really just work, shouldn’t it? It just felt clunky.
- Maps: a nightmare! It put me regularly miles away from where I was (and I was actually on home turf, so – thankfully – was able to survive without accurate directions.
- Browser: unusable (and, yes, I know it already is a little better than the old one).
- App World: slow and not very well stocked, is it? And, mind you, I was not looking for a gazillion funny novelty apps like light sabers and such. But even some fairly standard ones were not available.
- Speed: the handset does not run on the quickest of processors, and you could feel it. Some latency in certain processes, no really smooth pinch-zooms, etc, etc.
- Camera: OK but not more.
- Even the beautiful Blackberry Messenger (or BBM as it is also affectionately known) managed to confuse me a little: where on earth can I find that 3D barcode that allows me to add a contact on BBM? I still haven’t found it. Once up and running, it is a beauty as it always was. However, there are now many IM apps that are similarly good, and with most smartphone users on data plans, the fact that BBM is free might no longer matter as much.
On the good side? There is of course Brickbreaker (new high-score: 28,350 (!!!)) but, aside from that, the fairly solid feel of the handset, the nice rubbery back (really nice in fact) and the somewhat quaint but familiar design lines plus decent touch was all very good. I really liked the handset as such. But what was in it, not so much.
The New Kid
So – you probably guessed it – I gave it back and exchanged it for an HTC Desire HD. Only a couple of years ago, this would have been unthinkable. Not only was I a fairly die-hard Blackberry fan but to replace a Blackberry with a Taiwanese newcomer handset? Voluntarily? Noooo! However, it is gorgeous (besides being a bit of the big – no, really big – side). It does all the things that so frustrated me on the Blackberry so much better. Well, slicker at least. E-mail set-up is a breeze for Gmail but only a little less onerous than on the Blackberry for others (and, yes, the QUERTY does help for weird password combinations), but, once done, it works really well. And then, there’s of course the little things: 8 mega-pixel camera with stunning quality (although the lens sticks out a little at the back, which might be not so good), comparatively wholesome goodness when it comes to apps (in spite of the shortfalls of Android Market), heck, it synced all my apps from my Nexus automatically. And, Apple get this, it adds little raindrops (and a windscreen wiper) in one quick animation should it rain where ever you are (which, in England’s North-West, it does quite a lot, I’m afraid). Sweet! Browser works beautifully, maps come with proper satellite navigation on par with dedicated devices, and so on, and so forth.
Mind you, I am not yet sure if I may not change back to my iPhone 4 (which is, let’s face it, damn slick!). But I will give the Desire its run, and it does pretty well so far.
Blackberry Needs to Up the Ante!
But let’s look at my old friend Blackberry. Read through the last two paragraphs, and you know where Blackberry needs to up the ante. The Torch – its newest handset with its newest OS – feels slow, sluggish, dated, laboured.
But not all might be lost: last week, at CES, I could catch a glimpse of the future: RIM’s Blackberry PlayBook, which runs on QNX, rumoured to be the foundation for the next generation of “proper” Blackberries, too. And a beauty it is: much more hardware power (dual-core processor, namely a 1 GHz Texas Instruments OMAP 4430), swish graphics (1080p video inclusive), really impressive multi-tasking (HD video + game + websites + whatever open in parallel and seamless change from one to the other in an easy and casual swipe with no lag in any of it), and it will apparently be available on Sprint’s 4G network. Check here for the full specs.
It did however lack e-mail! Yes, you read that correctly: you can apparently not get RIM’s mother of all killer apps on the PlayBook – unless you also happen to have a “normal” Blackberry (or something to that end; the folks at the Blackberry booth were a little shy about this). What were they thinking???
But let’s take stock. What does RIM have? A – so far – healthy balance sheet, good hardware, still great e-mail service infrastructure (albeit not as unassailable as it used to be), in BBM a hit in the youth market and – arguably – a bit more of a runway than most because of the – again arguably – longer times it will take enterprise IT departments to swap systems (or something along these lines; Dell is probably an exception so far). In QNX, it also seems to have a really powerful OS at its disposal (just add e-mail, please). And, finally, it has a proud history of very good handsets (the Bold must have been one of the best ever) as well as demonstrated expertise to break into new verticals (as the Pearl had shown).
So, my dear friends from Waterloo, Ontario: do it. I think you can, just show us, will you?
Recently, previously civilized and subtle top executives of the world’s big mobile handset makers took the gloves off and became, well, a little more outspoken. What sticks from this is, of course, always only the most figurative snippets. Because all of these esteemed people have the most vested of all vested interests, their statements tend to distort reality a little. And because of that, we have increasingly lively debates at hand. But, alas, these debates may not necessarily lead to enlightenment.
So I thought I undertake a little mapping exercise and see where we end up…
The War of Words
I don’t know who started this. But we have had a couple of outbursts recently. Nokia’s soon to be former smartphone maestro Anssi Vanjoki (of nGage and other fame) likened switching to Android to boys who pee in their pants for warmth in winter. What he wanted to say is that it gets worse after brief relief. Apple supremo Steve Jobs sees no one (and in particular not RIM) getting anywhere near his beautiful iPhones anytime soon (he probably has not forgotten Mike Lazaridis riposte to the iPhone 4′s Antennagate). Others are convinced that Apple cannot beat Android. Period. Everyone wonders what Nokia will come up with (and, no, we do not think the N8 is it). Etc, etc, etc.
A Lot of Little Worlds
When one looks at the world map and then listens to the good folks cited above (and others), it appears that there is not one but many little worlds out there. Nokia is sitting high and dry in overall handset rankings with over 35% market share across all handsets. It is estimated to ship more than 500m handsets in 2011, too (so hold back with your obituary just yet). However, it is nowhere to be seen in the US (and even less in US smartphones where it is fighting a close fight with Palm around the 4-5% mark). Samsung (one of the few big boys not to participate in the above bickering) is building out its #2 spot with around 20% market share. Apple is well behind (although recording fairly impressive numbers given that it is basically a single handset company).
Does this matter in the discussion who is “winning”? No, it does not. An iPhone is useless if you are in an emerging (or developing) country with no 3G coverage and no abundance of power outlets from where to re-charge your fancy beauty every 8-12 hours or so. On the other end of the spectrum, a Nokia 1100 is useless if you would like to navigate on your handset through the urban jungle of Manhattan whilst shooting photos for the ones at home. But it runs forever, doesn’t mind a bit of sand or water and will never ever break. Ever.
The point is that there is more than one market here. The market is not mobile phones. The market is not even smartphones. There are many. And in some of them, Apple is looking really weak. And in others, Nokia is looking really weak.
Single Segment vs. Multi-Segment
Nokia’s strength (and, to an extent, curse) is that it wants to be everything to everyone. The N8 is a great handset from a hardware perspective but, after having played around with it for a week or so, I think it has a distinct 3-years-ago feel to it. It makes great phone calls though (which, well, the iPhone does not always). However, will Apple be able to challenge Nokia (and Samsung) in the broad lower-end mass market? Not for a long time, I would say.
The situation is a little more serious for other single-segment OEM. RIM used to live off the fat of the land in the enterprise sector. And it continues to thrive there. In recent years, it has seen a huge upswing amongst kids – because of the now almost legendary BBM (Blackberry Messenger for the uninformed). However, can you successfully build or expand on a single feature? And then on one that could really also be mimicked, worked around or substituted by something similar? Tricky.
Tricky in a different way is the situation for the likes of Motorola, HTC or Sony Ericsson: they have all committed their life to the Android platform. With Google’s muscle in the Open Handset Alliance, this means that they depend more and more on hardware design only. It feels a little like the movie business: hit-driven. And that is a tricky situation to be in. HTC looks good at this: this is home turf for it. On top of this, it has quickly started to try some gentle steps to distinguish itself (HTC Sense; Google Nexus One, etc) from other Android makers. Motorola’s Blur was less successful initially. And Sony Ericsson has yet to show its hand.
Vertically Integrated vs. Multi-OEM
All this does of course not bother Android (and perhaps also Microsoft’s Windows Phone 7) as they have the advantage of being able to bringing many weapons to the battlefield. Android’s huge advantage is one of price due to its open-source nature: For Windows Phone 7, you need to pay a software license. Android is – basically – free. Both have multiple OEM that fight their corner though. Which is, or at least can be, good. Google will not really care if the next killer phone is produced by HTC or Motorola or Sony Ericsson (or Foxconn directly for that matter).
Apple will likely struggle to match the sheer number of iterations being thrown at it. And therefore it is likely that Android will be winning, or rather continue to win.
Does this matter much to Apple? Possibly not. The margin discussion will, in all likelihood, be one that Apple execs will happily take. They will look better at it. However, will it manage to break the old Mac vs. PC pattern? Probably not. However, Apple’s position looks much brighter than it did in the decades of 5% OS-share mediocrity. The company has perfected the hardware-software-service-sex-appeal equation, which looks likely to cement a much more comfortable niche for it (just have a look at its market cap).
Vertically Integrated Multi-Segment
Nokia and Samsung try (or seem to try) a different way. Nokia is betting on MeeGo (its Symbian support sounds more and more hollow by the day). Samsung, which traditionally bet on almost every horse, made a big push for its proprietary bada OS.
This approach could be a winner: with their strong grip on emerging markets and the ability to roll out a proprietary OS across multiple segments, it presents an opportunity to nurture users in emerging markets (where the real growth will be in the next 5 years) into the use of their respective ecosystems. It did pay off for Nokia the first time around!
The Real Battlefield
In the more saturated markets in the Northern hemisphere though the battlefield is likely to be one involving OEM and network operators. This is where Apple really shook up the markets. A lot of the revenue streams from the iPhone simply bypass carriers. The Android OS opens similar avenues. The reason why Apple managed to pull this off is likely to be seen in the branding side of things: it enjoys such pulling power that carriers were bending over backwards to get their hands onto it (and then of course started moaning about the strain on their networks). Android is now being positioned as the alternative. At least, carriers can put competing offers onto Android devices.
Now, in markets where handset purchases are also driven by the overall package (cf. my recent post on this), this is likely to be important.
Nokia, Motorola, RIM, Samsung, etc all enjoy good distribution relationships with carriers. Apple is in a special position because of a) its brand but also b) its price; not much flexibility here, I suspect.
Nokia for instance struggled however to assert itself with some further-reaching ideas it had: some carriers pushed it back over e.g. plans to put Skype onto its handsets. It apparently has less brand power than Apple. Or the carriers were more used to having a say over what gets onto its handsets and what doesn’t.
Conclusion: We don’t Know What We don’t Know
We are, hence, in essence still in a fairly foggy situation: other than Apple’s brand power, we really don’t know as yet what, who, how will prevail. And that is in itself good news. Because it means we will have some time left with competing concepts, competing OEM and competing approaches. And with more CEO banter of course…
On 28 and 29 October 2010, Droidcon London will open its doors again, exploring in multiple tracks the Android ecosystem. Business, Developer, Design or SDK/API – there will be something for everyone involved or interested in the fastest growing mobile OS (and associated ecosystems) at the moment.
For the main conference on Friday, the speaker line-up promises a lot of learnings and insights.
I will be there telling people on how to make money on Android (hint: yes, it will involve Scoreloop‘s tools… 
). But you should also come and see great speakers from:
- Admob (yes, I know they’re Google now, too)
- T-Mobile
- InMobi
- comScore
- Sony Ericsson
- Motorola
- Orange
- Reuters
- Qualcomm
- INQ Mobile
- Ericsson
- Accumulate
- Alcatel-Lucent
- Device Anywhere
- and many more (check here for a full list of speakers).
The conference will be preceded by a barcamp on Thursday (28th), which will feature, amongst other things, a Google Android boot camp and dotOpen’s formidable AppCircus.
I am hoping to see you there. Go here to register (or check here for the full programme on Thursday and Friday).
