Some weeks ago, I spoke at the most excellent Mobile 2.0 Europe conference in Barcelona (I had posted a slideshow of the slides to the talk). Now the good folks of Dotopen, who organised the event, now made a video of my talk available. After watching it, I will say that one never stops learning 
. However, perhaps you will enjoy it anyway. Here it is:
Volker Hirsch from dotopen on Vimeo.
As now is good tradition, here are the slides to the talk I delivered at Games Convention Online last week in Leipzig. Have fun and remember that sharing is caring…
Last week, I moderated a panel at Mobile 2.0 Europe in Barcelona on “How to Make Money as a Developer”. Interestingly, there was no developer on the panel… However, there were representatives from Orange’s Partner Programme and from Telefonica, and I asked them if they would move from the “classic” 50/50 carrier revenue share (no one confirmed or denied the accuracy of that classic share of course) and, whilst they were clearly not willing to confirm anything (they probably couldn’t, to be fair), they did indicate that a revision of legacy models was under way in view of the not so new anymore challenges of app stores with their – now prevailing – 70/30 split in a developer’s favour.
This week, Vodafone came out a little more openly: at MEM, their Content Services Director pondered to
give [...] it back to the developers to let them monetise it.
The big one then followed. She said – and this must be close to an industry-first – that carriers
don’t necessarily have to drive towards revenue for all of that content.
And that is the real point: I have long been arguing that the real value of (great) content to carriers may not lie in incremental revenues (be it 50% or 30%) but in softer albeit much, much more important values, namely marketing, positioning as well as customer retention.
An example: a couple of years ago, we shipped a whole suite of X-Men 3 content, game, wallpapers, tones, you name it. The launch was, of course, around the movie launch (which was tremendously successful) and we had carefully crafted marketing plans including many brand partners (20th Century Fox, Activision, Panini, etc). We managed to drive some exceptional campaigns to which carriers in a lot of countries contributed serious marketing dollars. Did they do this in order to obtain an SMS-margin-matching ROI? Not in the strict sense. To them, this was brand extension and affiliation. And, boy, did it work!
Carriers biggest trouble is ARPU and customer churn. I am not sure about the latest numbers but for years the annual churn was reaching towards a third. And that is real money. If you can reduce churn by only a few points if you provide your users with great content services, you will see your money back many times. It is (brand) marketing, not incremental revenues that make it.
Now, as long as the content guys have revenue targets, the (normally very mighty) CFO of a carrier will ask painful questions on ROI and margins; and they will always come up short. Classify it as a marketing task though, and you’re looking really good: effective marketing that should yield measurable results at no cost. Hang on: at negative cost. How cool is that? I know that many a content guy at a carrier agrees with me here. Would they ever admit as much in public? You must be kidding me.
It is therefore good to see that Vodafone starts thinking publicly about alternative approaches with a view to strengthening and/or supporting their core business. Now put it in motion, folks! 
This week’s Carnival of the Mobilists is up and running. It features inter alia:
- a podcast on mobile ticketing;
- a recap of the M-Publishing event organised by the excellent Camerjam guys (which I so sadly missed due to illness);
- an interview with Tomi “Rat Hat” Ahonen on LBS and mobile marketing;
- new research on the growth of mobile data and its impact on the various parts of the value chain;
- Tomi Ahonen’s take on the iPhone 4
- and much, much more.
Oh, and they were also good enough to include my (very) recent post on people-centric design. Thank you.
The carnival is hosted over here and it is – as always really – well worth a read!
Apple’s iPhone is only a marketing fad for vain urbanites. True purists go for Android. Those who see the light in volume go for Nokia or Samsung.
All this are points often heard when one dives into the deeper echolons of most mobile tech blog or forum. Engineers throw up their hands because those “American-centric media types” “don’t get it” and only wave their flag for whatever Steve Jobs, turtle neck and all may put up onto the big screens of his church.
I am not American and I am not a media type. And I don’t wear turtle necks (well, not since c. 1989 at least). And yet, I do prefer my iPhone (3G) over my Nexus One. And this despite obvious advantages of the Nexus: better screen, quicker, haptic feedback (yes, Mr Jobs, I do like that), the concept of open source, etc, etc. So why do I stick to the iPhone? Fanboy? Marketing fad? Vain urbanite?
Here’s why: I have been trying to set up my Nexus so it will do what my iPhone does, and I am not talking of playing a fancy game or running some other app that is not (yet) available on Android. I am talking about the two key things I need a phone for (41-year-old non-techie I am), and that is phone calls and e-mail; calendar (with sync) is important, too. For the former I need my address book, and I need it to sync properly. For the latter, I need my (admittedly too many) e-mail accounts set up on my device and syncing properly. As to calendar, wait for it below. Alas, two very different experiences:
- On the iPhone, you do the following: 1) plug the phone into your computer, 2) answer “yes, please” when iTunes asks you if it should sync contacts and e-mail addresses, 3) get yourself a cup of coffee, 4) walk off.
On the Nexus, you’re OK (-ish) if your life evolves around Google. With a Gmail account and associated contacts (and/or calendars), you’re sort of OK. It does all that. Now – shock, horror – I do not actually send all my mail from Gmail and my contacts are mainly dealt with in my address book (take Outlook or whatever you want if you’re a Windows user). And I use iCal and not Google Calendar. And so it starts: there is no desktop application that would help me do this. On a Mac, the phone is not even recognised when you plug it in (and that is a rare thing on a Mac; is this another piece of Apple vs. Google? I don’t know but I doubt it). So you are finding yourself setting everything up by hand! Entering the POP3 and SMTP (or IMAP) server addresses, user names, passwords, etc, etc for seven e-mail accounts is no fun. And (remember I am not a techie) invariably leads to some box checked wrongly here or a typo in a password there and, kawoom, nothing works. I can set up a Google Calendar/iCal sync BUT that will only sync the specific Google Calendar bit between the two, and not any of my other (work, home) calendars. I can sync my address book with Google, so that works. The whole procedure took me the better part of 45 minutes, including lots of corrections and swearing and led to me abandoning a half-configured beauty of an Android phone. Great result.
So why is that?
My answer is: because they design it with engineer-centric design. And that is wrong! Why? Well, because most people are not engineers! An engineer thinks something along the following: I am Google and we love the cloud. Therefore, I will design everything so that it will adhere to that principle and will – in a purist kind of way – design everything in a way that you can beautifully and seamlessly set everything up – if and as long as you use all the wonderful Google services we have. And if you don’t get that, you’re not worthy.
The same works with Nokia: we’re Nokia and we have the best hardware, the best distribution and an incredibly good and powerful plethora of services around it (we did spend time, resource and money after all to become mighty competitors in maps [Navteq], music [Comes with Music], apps [Ovi - and the many iterations before it], etc). I will therefore design everything in a way that I can let this hardware shine as best I can; I mean: we had video calls since 2005, for elk’s sake! And if you are too dumb to configure everything in a proper way and cannot find the destination to where your downloads were stored, you’re not worthy.
Apple looks at things a little differently (and it is not only for the better although, for most people, it is): they provide a tool that brings everything I need over to my phone just like that. Job done. Easy! They will look at whatever tools they need for this. And if it means extending iTunes (which, yes, I know, they had already) to accommodate syncing data other than music and video to something other than a computer, than so be it. In that, they follow their own philosophy as slavishly as the other guys do but they do design it from a people-centric rather than an engineer-centric point of view. And that is why it works so well for people that are not (also) engineers.
They key point is this: Apple does not try (or at least not in your face) to change what people do. If I want to run my e-mail off 5 different domains, then so be it. If I prefer my contacts to sit on my disk rather than in the cloud, that’s fine. They’ll give me tools to facilitate doing what I do already and don’t lecture me on what I have to do to make it work. That this brings about subtle changes in user behaviour is fine: if you convince me gradually that things work better one way rather than another, I might be converted. But to tell me “my way or the highway” does not work! Ever!
The downside is Apple’s control mania, which blocks things (sometimes fairly questionably) because they are (or only might) be out of their control. And this is where Google, Nokia and all the others could score: try to combine things! If you would look at how Apple does things, and then – at the very end – you provide a door (doesn’t have to be a trap door, can be a flashy entry portal) to the innards and machine room of your device, so you can show off whatever you want and open the marvels of technology to those who can and want to handle it – so they can turn their super-smartphone into an uber-super-smartphone. But do leave normal people alone.
In the post-iPhone era, things have changed already (a little): you now get hidden installers (that do not ask you 100 questions on where you want to do what and where and under what penalties and with which risks), you get better interfaces, etc. BUT the default is still engineer-centric and not people-centric. Improve this, and the iPhone killer can be yours!
Image credit: http://www.ntamco.com/main/images/stories/design-is-a-behaviour.jpg
I stumbled across an interesting piece of intelligence today, which looked at the development of virtual goods in the market place. According to this, median spend on virtual goods by users in North America has climbed a whopping 67% year-on-year to $50 p.a.
Equally interestingly, males are the largest spenders and, broken down by ethnics, Asians (26%) lead Hispanics (20%) by some margin over whites (11%).
So far (sic!), most virtual goods (how many? I don’t know) are purchased from stand-alone web-based games (World of Warcraft anyone?) but 31% had bought items in social networks (that would be the Zyngas and Playfishs of this world) with 29% in “network-based games” (what are they, I wonder). Facebook credits were used by 16% of buyers. Mobile? No word. It’s coming though: do bear in mind that there are 3x more mobile subscribers in the world than Internet users! And, yes, that’s true…
Taiwanese handset maker and Android maven HTC has bought French idle-screen specialists Abaxia for $13m (or so industry sources say). Abaxia says it increases ARPU
by putting services at a zero-click distance to the user and pushing services directly to the front screen.
Think push notifications to a J2ME feature phone. Abaxia works with carriers and OEM to optimize the interface across multiple devices from different suppliers, which seems an apparent benefit to carriers as it will allow them to make their on-device brand communication consistent throughout the handsets available through them. That an OEM should then buy the company could therefore surprise…
And as to the use of idle screens? Hm, I am not totally convinced: an idle screen is, well, idle. I may be tempted to jump to it if an app sends me something from a friend (because, hey, it’s a friend in need) but I am not sure if the same attention can be garnered from the latest and greatest service offer from your operator. This is however what Abaxia claims it excels in. According to its website, the company helps
to drive not only data revenue but [...] to recover failing voice ARPU and secure advertising ARPU.
And here, well, show me the money. I have yet to see a convincing solution for this, and I am not sure if an attempt to capture the idle screen is the way to go.
However, when it comes to interface improvements, it might just work. So all might not be lost. And, in any event, congratulations to the teams at Abaxia and HTC!
According to a recent report, Android has zoomed past Apple in US smartphone OS share, taking the #2 spot with 28% behind Blackberry (36%) but now ahead of Apple iPhone OS with 21% (and, yes, I know that Apple somewhat lamely queried the accuracy of this). Be it as it is, Android is growing (and we all knew that, did we not?). According to Google’s CEO, Eric Schmidt, the company now sees 65,000 new phones being activated per day; this equates to a run rate of 23.7m for the year.
This is good news for handset manufacturers like HTC, Motorola and Samsung (all of who are shipping successful Android devices) as well as Google (which is fairly tightly embedded in the whole thing) but does it also reflect on the wider ecosystem of developers producing applications and services for the platform?
The main points that are usually mentioned are:
- Low overall numbers: Digital Chocolate’s CEO Trip Hawkins moaned the company sold less than 5,000 units of its hit game “Tower Bloxx” on Android Market, which was indicative for the lack of uptake. If that is so overall, may remain to be seen. I beg to take into a account that Android as a platform is fairly new and the overall install base is still smaller than its competitors.
- High price-sensitivity: according to an AdMob survey in January 2010, 12.6% of Android apps are paid vs. 20.4% on iPhone OS; the same survey revealed however that the average monthly spend was actually similar on Android ($8.36) and iPhone ($8.18) though higher on iPod Touch, which runs the iPhone OS, too ($11.39).
- Return policy: Google allows users to return an app for a full refund within 24 hours of purchase. This is seen particularly onerous for games (a lot of which can be played start to finish inside that time frame).
- Discovery: developers feel Google fell well short of Apple on this one. There is no possibility to discover apps from outside a mobile device (i.e. no iTunes) and Google has not really done anything in terms of marketing either (very much unlike Apple).
- Ease of purchase: I would like to add ease of use of the buying process. Registration with Google Checkout is a far, far cry from setting up an iTunes account. This will very likely change very, very soon as Google will add carrier-billing now that it decided to move distribution of its branded Google Nexus One from D2C web-only distribution to the usual carrier model.
So what about it? Let us not forget how young Android is – even compared to the adolescent iPhone. The platform launched from an install-base of zero some 18 months ago, with the HTC G1 being the only device out there – and available through a single US carrier, T-Mobile (with a market share around 12%). Whilst I do not want to take anything away from Apple’s superior accomplishments with the iPhone, the growth of Android is not too shabby either! And with a plethora of manufacturers deploying Android-based handsets now (cf. the growth numbers above), Android is likely to be powering into the fore even more (irrespective of whether or not the above stats on it overtaking iPhone OS in the US already being true).
Price-sensitivity is not actually as bad as people think: the aforementioned AdMob survey shows nigh identical average spending patterns. Personal impressions may again be hampered with by early experiences: be reminded that, initially, there were only free apps out there. They will surely still be hanging around, but will they also for much longer?
Apple has always been extremely scrupulous on approval of applications on its platform. And whilst this may now be held against it every now and then (e.g. in the case of nipples or Pulitzer-price-winning political cartoons), it has helped it to uphold a fairly high standard of quality, which Android was lacking (initially) and which even led to “crap-filter” apps. One can however safely assume that this will change once the market size improves: Apple’s margins might be superior to everyone else in the world but that does not mean that the margins game developers can achieve with it are the same. With Android OS primed to expand at a much faster pace, the numbers will clearly speak for it, and – I would posit – that will bring more and more quality to the store, with the fads sinking fast.
Also, do not forget the big brands: they do not necessarily care for a small share of the audience only. Whilst Android was fledgling and just starting up, they may have held back but, ultimately, they are about reach, and Android is certainly bound to deliver that. I would therefore suggest that we will be seeing an influx of large brands (gaming and otherwise) onto the Android platform very soon, and this will also help user orientation as to what to go for and what not.
The discovery of apps will also be helped by the more open nature of Android. There have been a number of announcement for curated stores by carriers (e.g. Vodafone, Orange, Verizon Wireless, Sprint, etc.), and these will certainly not be allowing a free for all! Besides that, the app store model does per se pose some challenges on developers: the more successful a platform (and/or store) is, the harder it is to be discovered. One might need to look for other solutions in that respect…
The billing side of things is bound to improve, too. With carrier-billing around the corner (cf. supra), this will get easier and better. And also easier and better than it is on the iPhone: charges will simply appear on your carrier bill (smart pipe anyone?). Besides that, the business models for games are undergoing significant changes anyhow: Freemium takes centre-stage, and so it should: the model allows people to try a game out and be charged for it only when they know that a) they like it, b) what they are being charged for (e.g. that coveted sword, a couple of precious lives, or that cool background theme).
Remains the return policy. I have been raising this with Google, and it must be pointed out that similar things exist on the iPhone (they’re just “better” hidden). So besides the obvious (Google’s good intentions came back to haunt them), it is also time to think of new business models (cf. Freemium). It is not something constrained to Android: transparency requires you to deliver value. If you do, there are good and transparent means to monetize that value; and users will follow.
So, yes, there is game in Android. If you don’t believe it now, just wait for it!
Here it is, the May Bank Holiday edition of the Carnival of the Mobilists. For those not in the know: it is a weekly write-up of the best and brightest in the world of mobile-(related) blogging and is being hosted each week on another blog; this week it’s me… The easiest way to follow the Carnival every week is to subscribe to the Twitter stream of the formidable Peggy Anne Salz.
So here’s what this week has in stock for you:
James Coops from Mobyaffiliates provides us with an excellent overview of mobile affiliate networks, a fairly fresh approach to carry the multi-billion dollar online equivalent to mobile.
Jay Ehret asks the question that normally costs a round, namely “Is it the Year of Mobile yet?“. And he has a refreshingly clear look at it: a) it is impossible to throw all of the various mobile marketing things (SMS, mobile web, LBS, mobile wallets, m-commerce, etc) into one bucket, and right he is!, b) he reckons that it is certainly time for mobile now since low entry barriers and cost basically make it a ride you cannot lose.
Dr Jim Taylor delights us by adding a few more acronyms to the mix: NEI is the new TMI. The “I” stands for information and Jim looks how the wealth of available information and the way people handle it may reflect upon larger sociological developments. Very thoughtful stuff!
Ajit Jaokar from the OpenGardensBlog looks at the decline of fixed line and wonders if we’re all erring, namely because the wires are needed to take the data load off (hyper-)broadband mobile networks. He then wonders if one shouldn’t think mobile and fixed-line as one and design accordingly.
Peggy Anne Salz points us to a podcast on app store marketing. With nigh on 70 app stores and gazillions of apps, discovery, marketing and sustained usage are issues central to the distribution (and revenue!) strategy of every app developer (I for one certainly bookmarked it).
Tego Interactive’s Alfred de Rose queries whether Apple needs an iPhone in the enterprise (he thinks it doesn’t, and his arguments are very noteworthy!).
And, finally, Rudy de Waele announced the next edition of the wonderful event that is Mobile 2.0 Europe, which will take place in beautiful Barcelona – and not in rainy February either but on 17 June. Book your tickets here. Next to it, there will be the AppCircus, a unique traveling showcase of the most creative and innovative apps presented by their creators at top events around the world.
And that’ll conclude this week’s carnival. Make sure to clue yourself up, read, listen, ponder, share and discuss!
Next week’s edition will be hosted by James Coops at his MJelly Blog.
Juniper Research, makers of research and publishers of mindblowingly big 5-year-predictions recently released a report on “Mobile 2.0″.
The term, according to the free promotional white paper that comes with it, is to mean mobile services around the social web, geo-location and presence and may be based on
a mash-up of application functions and communication channels [that] can include mobile messaging and voice – namely SMS, MMS, mobile IM and VoIP.
All this is spot-on and quite agreeable (and I haven’t come to the predicted market size in – you guessed it – 5 years yet) but I feel they are missing a major, major point here, and that has to do with (if you want to call it that way) “mash-ups” and “convergence”: in short, they fall foul to the old mistake that, as media move on, the predicted revenues for a new medium is being comprised of the products and services of the old one; and that is wrong!
Mash-ups can already be seen between different kind of applications the report mentions (and, most notably, with some it didn’t mention at all): E.g. FourSquare or Gowalla are service that utilise presence (allowing your friends to see where you are). You can also share it via social networks and contact these friends (perhaps to ask them if they want to meet up as they are only 2 blocks down the road) but they have also added gaming elements (mayor of Oxford Circus or Union Square anyone?), and it was these latter ones that arguably gave the edge to the service and lifted them over and above many similar location-aware apps. The combination of a variety of the feature sets Juniper identified as being distinctly “2.0″, namely presence, social, and geo-location with other, “classic” products and services will unleash an even greater power: playful social interaction is not necessarily confined to “classic” games:
For instance did Ford take it a step further with the latest model of the Fusion Hybrid: they put something akin to a Tamagotchi into the car, which promotes economical driving: a plant grows (at the very right in the picture) when you drive economically, and it withers when you don’t. Cool, huh? What they do is to appeal to the senses of competition and, arguably, care in order to foster more economical driving. What’s missing is that drivers could share their “scores” with friends, challenge each other and, long-long-term, get rewards (eco-tax credit?) if they perform particularly well. Playful social interaction in a car – who would have thought?
A mash-up of e.g. games (and the playful-ness in all of us) with some of the other services that are available and – now – increasingly accessible will likely result in a completely new range of products, which will – I would suggest – exceed the predictions made by a large margin (check Jesse Schell’s talk at DICE 2010 for more [and even wackier] musings of what the future may hold). And the reason for this is that addressable user base and, indeed, usage will multiply because completely new and untouched segments (both in terms of users and products & services) are being unlocked for value-added mobile services.
So, for once (!), I think I may be able to beat Juniper’s lofty predictions; not sure if in total numbers (they’re always hard to beat on that: the one for mobile 2.0 is already at a not too shabby $19bn) but as to the scope of the market. Good times!
This one needs to be short since GDC is now upon us but this week’s edition of the Carnival of the Mobilists, which is hosted by Andy Favell over at MobiThinking, is just too packed with goodies to let this slip.
The carnival covers everything from eBook publishing to mHealth, mobile banking (and, separately, micropayments), a ton on mobile marketing, app development, Flash or no Flash on Apple (answer: no) and much, much more.
The carnival is hosted over here, so go read, whilst I will try to survive the conference jungle…
The term “Freemium” has been coined first a while ago by Union Square Ventures founder Fred Wilson and has been articulated further by Chris Anderson of Wired fame in his book “Free”. It has since attracted significant interest, last but not least because the concept seems to work…
Ngmoco goes Freemium
Yesterday, Ngmoco, one of the new world’s (scil. Apple App Store’s) giants announced it raised another chunk of money ($25m to be exact) and acquired Freeverse, an iPhone developer that recently announced it had sold (sic!) more than 5m games, which are, alas, not always free – in the contrary. Together with this, Ngmoco announced a push into the Freemium model. So there we are…
To recap: the company had released two titles so far under the Freemium model, namely Eliminate Pro and Touchpets. Both are rumoured to having done, well, OK in terms of revenue (although Ngmoco CEO Neil Young said they were clumsily made). They had previously acquired Miraphonic, makers of Epic Pet Wars and other games, and Neil wants to use the the combined forces of development power to push the Freemium model onto the iPhone properly. Good on him!
What is it about this Freemium?
The term describes games (or apps or services or whatever you can think of) that are initially free to use but use micro-transactions from within the game to monetise it. Eliminate Pro did this by selling Power Packs without which players needed to wait X hours before they could continue. Online, we have had other examples, e.g. Zynga’s Farmville where you can buy hard cash in order to immediately acquire items for which you would otherwise have to play hour after hour after hour. You get the gist… If interested, you should read Chris Anderson’s book since the underlying rationale does not only work in the little work of games.
The principle is simple and also compelling – from both the developer’s and the user’s side: the developer gets a shot at grabbing a multiple of eyeballs allowing for a multitude of chances to convince users that it is the real deal. Users get to look into the mystery bag before having to cough up hard cash. Win-win, you think.
And yes, it is: act honestly and transparently and you shall win over the hearts and minds of your users. IF your product is good and useful, the users will appreciate it, become fans (and maybe even fanatics) and will thus serve as your secondary sales force by recommending things to their friends who are much, much more likely to buy on the recommendation of their friends than from anyone else. What a wonderful idea.
Things to get right
There are two issues with this though, and it is important to get these right:
- Make sure to get the mechanics right. This does not work for any game or app or service. There must be some initial intrinsic and compelling value. Why would users otherwise use it? There must also be a good reason to buy. Why would users otherwise want to buy premium features? If you get it wrong (i.e. if too many users do not feel fairly treated), your users are gone. And what is the price of user acquisition? Yeah, you get it. It is MUCH more economical to treat users well; they will come back AND they will recommend you and your products.
- Make sure you get the balance right. Don’t be greedy, don’t be too tight. The aforementioned Eliminate Pro didn’t get the weighting right. The result was a) a couple of seriously upset users and b) sales that were not comparable to the top of the class (anecdotally, Eliminate Pro featured in the top-100 top-grossing list of Apple only very shortly). Remember that you need to deliver value; otherwise users – rightly – won’t feel properly treated but ripped off. And then? See above on customer acquisition costs.
The other side of balance is, however, that giving away too much will kill your business. And that is no good either.
Tools
There are tools to make your (the developer’s) life easier on this: create avenues of the players’ passion, make it easy for them to communicate their passion to their friends (which form the only community that truly matters to most of them) at a time when it is relevant to them, and you’re a big, big step closer to getting the principle right, which is to deliver value. Very, very few users will object to paying for value. But they will only do so (and in this fluid, transparent world more than ever) if the value is true and not some cheap glass pearls conceived to deceive.
Challenges, rewards, and incentives etc have shown to be powerful tools to spurn user activity. If you deliver value, there will not be hard feelings. If you want to learn more about available tools, get in touch…
The Power of Fanatics
74% of users buy things based on recommendations of friends. That is an astonishingly high number. If you manage to convert simple players into fanatics, you turn them into ambassadors and then you just need to do the maths: if the average iPhone user has 100 friends, you have a potential 74 sales (or free downloads with subsequent monetisation) per initial user. Woah!
Most importantly though: this approach does not alienate users. Why not? Because you delivered value. Deliver value and users will appreciate that (just ask Tony Hsieh, he just sold his company for $887.9m; he sells happiness, he says!).
Cartoon Credit: http://www.gapingvoid.com/thisbusinessmodel876-thumb.jpg
