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Carnival of the Mobilist # 228

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On 05/07/2010

In Carnival of the Mobilists

This should have come a week earlier but, alas, I was on the road – quite literally – en route to San Diego and Qualcomm’s most excellent Uplinq conference.

Life of course did not stop, and amongst the things you should not miss was (and is!) the last iteration of the formidable Carnival of the Mobilists, hosted by our very own Peggy Anne Salz on her award-winning MSearchGroove blog. Amongst the gems not to be missed were:

  • An interview of a company focused on Windows Phone 7 (yes, you read that right!);
  • Tomi Ahonen with another go at the app economy (which he claims isn’t much of an economy; read my comments on this here);
  • A look on web bookmarks as an alternative to apps (to which I still not agree; cf. here);
  • A couple of posts on Android, and specifically Motorola’s Droid X (and the future, if any, of Motoblur);
  • And many, many more…

Finally, my post on Vodafone’s pondered changes to its revenue share structures featured, too.

The carnival is here, and well worth a read! And, again, my apologies for the late posting of this. But the old Highway 101 along the Pacific just had me in its grips… 🙂

Vodafone pondering revenue share improvements

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On 23/06/2010

In Carriers

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! 🙂

App Store Fragmentation: Vodafone & Android

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On 15/06/2010

In 1, Events, OEM, Slides

It’s been looming and was long expected but today Vodafone announced it would embed its Vodafone 360 app store on two Android devices next to Android Market. Vodafone says their store would give partners a richer retailing experience than Android Market – but then they would say that, wouldn’t they?

But cheap puns aside, the move does have some legs: Vodafone uses Qualcomm’s Xiam personalisation engine, which provides recommendations based on user behaviour. They claim – and you may have heard that before in any number of my talks – that recommendations are a much stronger driver than promotions, stronger by a level of 4x to be exact. This ties in with my preachings: nearly 3/4 of all purchasing decisions (not only mobile, all of them!) are made on the recommendation of friends. And, alas, this is where “user behaviour” as the applicable pattern comes short: do I care how many, say, Amazon buyers of Grisham novels are also buying other authors’ crime thrillers? No. Why not? Because I don’t know these people. Do I care what my friends may think I like? You bet! Why? Because they know me and my tastes. Doh!

Anyway, back to Vodafone. They have realised (and, credit to them, admit it!) that a vertical implementation where you only get the full scope of 360 services if you have one of two phones doesn’t work. And, well, that’s somewhat obvious, isn’t it? Or is it a reasonable assumption that all my friends will all of a sudden (and at the same time) exchange their various handsets for a Samsung M1? No, I thought not either.

Vodafone did divulge a little data sniplet that must encourage them though, and that is that 360 customers have a 3x higher ARPU than others. If you look at the above (recommendations, friends, etc), that is not completely surprising. So now the next hurdle is to roll it out across their whole range of handsets. And let’s face it: a simple store won’t cut that on its own. Going cross-platform also means that – depending which handset you fancy – you may find different app stores of differing attraction competing with Vodafone’s own for attention (e.g. does Nokia’s Ovi offering seem to have more traction than, say, Blackberry App World but the latter has – from a publisher’s perspective – vastly superior price levels). All in all pretty sub-optimal, I think.

On a sideline: I will be moderating a panel on “How to Make Money as a Developer” this week at Mobile 2.0 Europe in Barcelona and I will be having the immense pleasure of having two operators on the panel (Orange and Telefonica-O2) as well as Microsoft (representing the OS side). This Vodafone announcement highlights some of the challenges the industry is facing. Interesting times!

Conference: Mobile 2.0 Europe, Barcelona

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On 04/06/2010

In 1, Events

On 17 June, a wonderful conference opens its doors: organized by the formidable Rudy de Waele and his team, the beautiful city of Barcelona (but without the usual Mobile World Congress stress and with better weather than in February!) is host to Mobile 2.0 Europe.

You will find a great line-up of speakers from across the mobile ecosystem, which should allow for a wonderfully balanced overview of what’s going on. The organizers have lined up senior guys from the giants of the industry, such as:

  • Nokia
  • RIM
  • Vodafone
  • Opera
  • Telefonica
  • Orange
  • PayPal Mobile
  • Microsoft

But they then coupled them with the nimble and agile guys like us, so you will also find:

  • Distimo (analytics)
  • Scoreloop (yes, I will be speaking)
  • The Astonishing Tribe (UI experts)
  • W3C
  • Future Platforms
  • and more…

As if this wasn’t enough, the AppCircus will also stop at the event with an on-stage show of the best and brightest apps around.

Join us, it should be tremendous fun! The registration page is here.

Has Android Got Game?

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On 17/05/2010

In 1, Apple, OEM

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! 😉

O2 Can’t Do: Why it is going to lose me (#fail)

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On 01/12/2009

In 1, Carriers, Events, Slides

Quick facts: I am an iPhone user. I wanted one, I am based in the UK. What to do? Switch to O2, which had the exclusivity for this. This post is not about bandwidth, 3G availability or anything like that – I have not (much) to complain about this actually. It is not about the iPhone either.

This post is about the simple mistakes network operators (plural; O2 is not alone here) make by not living up to their own messages. Listening to customers and identifying (and answering!) user needs.

Back story: I have an iPhone 3G on a £45/month plan, which gives you countless voice minutes and lots of SMS and unlimited data – in the UK that is. In short, I do not normally have to pay anything for (UK) calls and texts, hence the tariff. Now, if you dare travel with your iPhone, you’re in for nasty surprises. The only thing O2 UK has to offer is slices of 10 or 50MB of data for some hefty sum.

One of the most insulting things about this is this: I used to have a Blackberry on O2 and, you see, you can purchase an international roaming plan that gives you blanket data coverage on your device when abroad for – if I remember correctly – £25/month extra. Would I take this? Any day. Does this exist for iPhone tariffs? No.

O2 UK would be able to easily deduce that I am traveling regularly. Great opportunity to hook me into an even dearer deal, you might think (ad slogans include “We’re better, Connected” and “O2 can do”). But wrong you are. Whenever I travel with O2 abroad (and this is on an O2 network), this is what I get:

They actually send me at least 3-4 SMS with various warnings and alerts about how expensive and truly nasty it is to use my (O2-purchased) phone to its full potential and capacity whenever I dare leaving British soil. Connected? Can do? Not at all! Very inspiring. NOT!

Does it offer ANY solution to my apparent need? No. Does it try? No. What does this say about how important I am to them as a customer? A lot. And nothing good either.

It reveals a very “last century” way of looking at life: users are basically being perceived as revenue-generating units rather than someone the brand even attempts to communicate with. This is a very short-term view of the world, and one that is bound to fail quickly. Why? Because I am very likely to switch carriers (I have already unlocked my iPhone, which you can – incidentally – do here).

Now, O2, listen up: will I switch because there are so many other so much better offers out there? No. Will I do it because I fear the charges? No. I might end up paying the same as before. But that’s OK. I will do it because you, my dear carrier, showed me that you do not give a toss about me as your customer and you failed to deliver on your promise (“connected”, “can do”). I beg this will change about 2 weeks before my contract with you runs out: you will promise me everything under the sun to keep me but this is cheap, and I will not have it (as, I suspect, will apply to countless others).

Here’s the solution: Try and build some trust in your brand and your actions (Zappos anyone?). The reference to Zappos is not only a fashionable one (and, yes, I know it turns up in every man and his dog’s presentation these days; I used it myself a couple of weeks ago… But Zappos business is, get this, O2, to deliver happiness. You think that this is over the top? Think again: Tony Hsieh just sold his company for a very real-worldly price of $800 million to Amazon. His company is America’s biggest shoe retailer. Did I say shoes? Happiness!

Do you have to go that far? I would wish you would. But, dear O2, a little respect and care would already do it. Any of this? None I can see or hear, and your hotline will know I have tried! In modern “Tweetish”: #fail.

Listen and deliver. Then the rest will come. Until then, it’ll be Vodafone for me (who at least abolished roaming charges) or Orange (if they manage to learn from the above in time before my contract runs out).

Good bye!

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