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December 29, 2010

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Andraz

Impressive as always

from a startup point of view, the iPhone market does matter the most, due to:
- iPhone market does pay for content
- AppStore is the most polished of them all
- AppStore managers do a very good job at advertising new and interesting apps
- revenues are clear
- development environment is good
- PR machine behind apps for iPhone is enormous

Otherwise it seems that MS, Samsung, HP and Nokia will be spending the lots of dineros in 2011 to attract new developers. And that is good news for app making companies.

Tomi Ahonen

Andraz - thank you for the comment, but it also reflects the SEVERE mis-understanding of the mobile opportunity by most new companies who now are entering it, especially start-ups. An app on the iPhone app store will be lost among 250,000 apps. It has no chance whatsoever (an app from a start-up that is) of reaching any kind of success whatsoever. None whatsoever. It is utterly a fool's errand. But the costs to develop a simple mobile web site, on WAP and HTML using 'Dot Mobi' guidelines costs one TENTH what it costs to do a standard paid app for the iPhone and reaches... a 50x bigger potential audience. This is the reality that is lost to most who do not bother to study the real opportunity and just go with the hype around apps. And what kind of money is there in apps? This year about 6 Billion dollars in smartphone apps. That is not app store money, that is all apps, the majority (67%) is business apps to enterprise/corporate customers, only about 2B dollars is app store apps across all app stores globally. Compare that with 125 Billion dollars of 'premium' mobile data revenues - ie non-messaging mobile data revenues, most of which runs on WAP billing mobile internet.. I understand what you say, and I know there must be tens of thousands of developes and executives and owners who act like you mention, because they believe what they have read, and they honestly think that there is a real opportunity (today) in apps on the iPhone. There isn't. That opportunity may come, and whatever it may be on the iPhone, will be far bigger on Android and Ovi, but those all pale in comparison to the opportunity today on the mobile web and premium mobile SERVICES, many on such basic and 'boring' platforms as SMS and MMS...

But thank you for the comment and yes, there are of course many things that Apple does well, its best asset currently is how much the Apple brand alone will distort reality. I love Apple, but I deal with reality here on this blog. Thanks.

Tomi Ahonen :-)

James Pearce

I am sure you know that Symbian, your 'world giant', shut down its developer web site (http://symbian.org/) earlier this month, and that Nokia has hardly rushed to get an equivalent up and running (http://symbian.nokia.com/).

Your statistics are correct, and tell a compelling factual story. But when it comes to winning the hearts and minds of developers who are building the future of this '7th medium', it becomes emotional - and Apple are hard to beat.

I believe 2011 will be the year where we will start to think about 'smart phones' being a right, not a privilege. (It was already a daft, relative adjective for the industry to use!). For example, presumably we will see the Android brand bleeding down into the mid- and then lower-end of many manufacturer's portfolios, and also into the developing world. And you're right that Bada is a dark horse.

Nevertheless, I fully agree with your overall assertion about the mobile web. There are so many reasons why developers will get discouraged from writing native apps-per-platform when the capabilities of web technologies and frameworks are catching up so fast. (Disclosure! This is why I came to work for Sencha ;-) )

I hope we look back on native app stores as being a temporary blip in the inexorable rise of the (mobile) web, much as we look back at the AOL CD-ROMs and operator walled gardens of 16 and 8 years ago respectively.

Andraz

Hi Tomi

you are of course correct. But :)


If there is an opportunity for mobile app developers, then that opportunity currently lies predominately in apples AppStore. The competition just does not provide the environment that would generate results. Even though the competition on AppStore is enormous. That is why AppStore still dominates with startup ideas and will stay that way until Android picks up the paying clientele, or until Ovi store gets better, easier and more convenient end user and developer.

I do agree that certain content can be done in a much easier, cheaper and more rational way on wap, mobile web, etc... But! The majority of revenue on mobile app stores comes from games. And games can not be easily ported or developed using wap/web. So, if you are targeting the majority of the App market, you are probably developing games. So, you have to do it natively.

Mark

I remember at the turn of the millennium there was a lot of excitement around web opportunities and how fortunes could be made. Lots of venture capital money was thrown at start ups focusing on the commercial opportunities that might arise. Of course we all know now that the vast majority of these start ups utterly failed causing a stock market crash and ruining a lot of investors.

Fast forward a decade and it's apps this time. Unfortunately the scenario's the same, very few revenue opportunities and only a handful will succeed.

Plus ce change, plus c'est la meme chose.

Romain

Hi Tomi,

You often mention the widespread HTML, WAP and Java capabilities of low end phones in order to illustrate the size of the "dumbphone" opportunity, in particular in developing country.

However, the phone capabilities are not the only factor that define the adressable market: you need to take into account whether the user has subscribed for data services or not, because without an Internet access you can't take advantage of a mobile browser or Java VM.

And in developing countries, where people massively use basic pre-paid subscription, very few people actually have a data subscription...


Also regarding handset market shares in developing countries, I'd be interested in knowing if you account for the "grey market" that exists in those countries for consumer electronics.

In Morocco for instance, many phones are purchased on the street, in informal shops, including phones that are not officially imported there, like the iPhone for instance.

Don't you think that the real maket shares, taking into account "informal" sales, differ significantly from "official" market shares that only account for devices sold through legitimate channels ?


Oh and BTW thanks for the freebie, as always !

Hoi

Some good factual data in terms of start-up app developers its useful to look at these stats and determine which markets and focus you want to develop for.

e.g. Apple probably has the easiest onboarding/polished tools and process for app developers, but that comes with huge competition. Therefore, for a start-up who is still attempting to build reputation for their products, is this actually an easier way to gain traction? Would it make more sense to develop into an alternative large market (e.g. Android or Qt) attempt to gain traction vs less competition and then port over to Apple with a competitive advantage through reputation?

Secondly, even though some of those numbers are big (MMS installed base etc.) what are the actual usage statistics and what are the opportunities in accessing the paying use base (i.e. is it a case of doing deals directly with carriers?)

And of course, there is the revenue model, if we look at the 5%, 9%, 17% segments of the smartphone market share, which revenue model and pricing model is most appropriate for an app developer? Are the 17% as likely to spend money purchasing apps as those in the 5% , will the 17% click through more ads, purchase more virtual goods? It comes down to an ARPU per segment to strategically select which OS to develop for.

kdt

And when you talk about the "mobile market", looking at just phones is like the blind men feeling around on the Elephant. You can't ignore the iPod Touch or to a lesser extent the iPad.

Timo Koola

Tomi: About the start-ups and their opportunities in mobile. I accept that developing an app takes more money and yes chance of breaking to the front row are slim even when your product is sound. BUT. Is it really any easier for a startup to go the mobile-HTML/SMS/MMS route? How is it any easier to get noticed in the sea of gazillion web services or get any kind of visibility in the world where operators hold the absolute power? Furthermore, whatever you save on development you need to spend on marketing just to get to people trying your service. On app store you get at least thousands of people downloading and trying your app out and you MIGHT get traction started that way. And if your plans are to go global what share of revenue you expect to get from hundreds of operators that you need to talk to get the billing going? 70-30 revenue split of app stores seems overly generous if you have ever implemented SMS services.

How do you tell 1 billion people about the next coolest thing on their mobile browser? Or even 50000? How do you start the traction?

I can see the value for a "dumbphone" service for existing brands (Tescos and Coca-Colas of the world). You can use your existing marketing channels for getting the message across about your service. For startups you need to start with minimal marketing budget and zero brand awareness.

Tim Harrap

As ever the CDB blog feed is an important source of information on the mobile world courtesy of Tomi. As an aside Tomi/Alan I think the blog should add in a "Like" button for comments or the main article that prove interesting but one doesn't feel moved to comment further.

Stephanie Rieger

Hi Tomi,
Can you clarify how you define "a 'full' internet HTML browser" (pg 40 in your book)? The chart above on that page mentions XHTML browser but the sentence below mentions "full HTML". Then in this blog article you go on to say:

"Most phones in use worldwide today have a full HTML browser - even in the Emerging World, seven out of ten phones in use has an HTML browser. "

Are you counting XHTML MP (e.g. what you would find on all Nokia S40 before 2009) *and* HTML 4.01+ (Nokia S60 from ~2005 onwards, most S40 from 2009 onwards) many Samsung, most Blackberry, all Android and iPhone) in those calculations, or just HTML 4.01+?

Also, is the Opera Mini install-base accounted for?

Thanks!

Alex Kerr

@James Pearce (and others supporting the anti-Symbian, pro-iPhone view):

> "I am sure you know that Symbian, your 'world giant', shut down its developer web site (http://symbian.org/) earlier this month, and that Nokia has hardly rushed to get an equivalent up and running (http://symbian.nokia.com/)."

Hang on a minute James, I assume you don't know that all the developer focus for the Symbian platform (and in a future sense, MeeGo) has shifted to QT, right?

Plenty of developers are indeed realising the opportunity Ovi represents. Not just the market opportunity, but the quality of SDK tools (better than any other platform by multiple accounts from multi-platform developers) and the ease of developing software, or indeed porting (I keep hearing testimonies ranging from 2 days to 2 weeks to port full iOS apps to Qt/Symbian, complete).

Stats from 18th November were "At present, 92 developers have reached the 1-million+ download milestone each for their apps. (We were really hoping it was going to be 100 by the time we wrote this! Oh well – it will be next week). You can find out who they are here ( http://blogs.forum.nokia.com/blog/nokia-developer-news/2010/11/18/92-developers-over-1-million-ovi-store-downloads ).

And there’s strong evidence of considerable fresh developer interest in the platform. Over 2010, there have been more than 1.5 million downloads of the Qt SDK and more than 400,000 new developers have signed up with Forum Nokia over the last year. The move to Qt, which speeds up development and seriously reduces the amount of fragmentation developing for different devices, together with free app signing and an improved revenue share for developers are some of the key reasons behind this surge in popularity. There’s some great videos on Forum Nokia from developers converting to the platform here ( http://blogs.forum.nokia.com/blog/nokia-developer-news/2010/11/18/devs-share-experience-using-qt )."

As for Ovi Store itself, and thus the market opportunity: "The total number of users of Ovi now exceeds 165 million people, across more than 190 countries. And it’s growing at the new rate of 250,000 new users every day. Ninety per cent of visits to the Store lead to an app download – on average each registered visitor downloads 2.6 apps."

From: http://conversations.nokia.com/2010/11/18/ovi-store-3-million-downloads-a-day/

It also has in excess of 3.5 million downloads a day.

Now, any developer with more than a single brain cell, should go on iPhone App Store and look at the vast wealth of apps, games etc. And then go on Ovi Store, and see most of those missing from there. And then consider the above stats. And then consider putting two and two together and making four, and getting down to populating the Ovi Store and making shedloads of money. And the more intelligent developers will obtain stats about what apps and games are most popular on iPhone App Store and recreate the same, or similar for Ovi because you then already know what will work and make money.

I'd have said Ovi Store right now, is more or less as close as you're going to ever get to the development equivalent of shooting fish in a barrel. Yes, you still need to make a decent app with a decent idea, but given all the above, conditions are about as great as they're likely to be on any mobile platform.

Of course there will be those developers who cannot overcome their anti-Nokia and/or pro-iPhone or Android zeal and bias, and those developers will miss out, and chances are remain poor and disappointed and angry.

Nokia has done an incredible job (but not perfect, but who's is?) at setting up a great environment for developers to earn from. I'd say their main missing piece right now is advertising more fully the financial successes that existing developers have had.

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Dear Tomi,
Lets Understand the Mobile Phone Market, installed base and smartphones vs dumbphones.That is a good article,thank you for your post,i have learned a lot,thanks.

ameerh

http://mobilephonemodelshub.blogspot.com

Krishnan

Tomi, Thanks for a good analysis as always.

Point I would like to also cover is the Meditek chipset based no brand/ no name / local brand phones. This is not accounted for in your statsitics.

I believe that there is a huge chunk of meditek based phones which are taking a huge bite out of the established dumbphone manufacturers especially in India, East Asia & Middile East and now perhaps even Africa.

Brian S Hall

Great work! Thanks.

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Android users, G(.)(.)gle is watching you...

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Tomi Ahonen

Hi all, will respond in series

Hi James, Andraz, Mark, Romain, Hoi

James - good comments, thanks. And I agree the facts will pale with the perception game and Apple and Android have the hearts and minds for now. Lets see if Mr Elop over at Nokia can turn the marketing spin up a bit at the new 'Big Blue' haha (as a joke about IBM the original Big Blue of computers)

Andraz - good points and on games I do agree, in most cases a game works much better as a stand-alone app or as an app with connectivity, rather than a web service. Good point. What bugs me is the massive stampede by all sorts of media and consumer brands rushing to launch their iPhone app, like Boris Bikes in London for example. Talk about the ultimate in elitism haha, where most who would need a free bike can not afford an iPhone and most who have iPhones in London will have their own cars (some with chauffeurs, some with their own helicopters haha) and they would rather be seen riding their super-luxury carbon fibre bikes than a Boris Bike. And to help find where the nearest bike is? This is the concept of Kizoom for London Underground - done award-winningly on WAP what, 10 years ago. Argghhh

Mark - excellent point. And yes, I have been warning, that if the app hysteria doesn't calm down, we might be headed to a bubble. Not for all of mobile but yes, for apps. I don't think we're there yet but its looking bad

Romain - good points, but remember, for prepaid users and users in emerging markets, the PC penetration rate is very low. For those who need occasional web access, the phone, even very basic (and expensive data) is a reasonable compromise and often far cheaper than going to the internet cafe.

On the grey market phones, yes, I have been tracking them and account for them in my stats.

Hoi - good points. Let me just address the MMS issue here. The number I quoted is active users. These are people who send MMS (or pay to receive them). So if the user already is familiar with MMS (and has MMS capable handset, correctly configured etc) then for the company considering app or MMS, they are 'trained' users who are instantly ready to consume ALL you send at them via MMS. Meanwhile NONE of the smartphone owners are all ready. So the installed base of smartphones is overcounting the supposed opporunity. Some smartphone owners do not install apps - these will never be accessable. and of those who do, the brand has to convince them to do so. Very few apps pass the 1 million user level. So 100 million iPhones shipped, maybe 80 million in use today, maybe 70 million use apps, and of those a couple of million downloaded an Angry birds. But there are billions of active users of MMS.. The scale difference is massive.

Thank you all for writing

Tomi Ahonen :-)

Tomi Ahonen

More replies

Hi kdt, Timo, Tim, Stephanie, Alex

kdt - This blog article was clearly about the phones market. There are very many other portable devices, like the iPod Touch and iPad that you mention, and other portable devices like the Playstation Portable, digital cameras, laptop computers, etc. This is NOT about portable devices (which are 'mobile' as in movable). This blog is about 'mobile' devices ie those where the used SERVICE itself is mobile, ie served via the cellular service AND permanently connected. A laptop or iPad with a 3G connection is portable but not mobile.

But if you feel the world of 'mobile' by your definition, what I call portable, is the elephant - you are sadly mistaken in the numbers. Lets take the specifics you mention. The iPad and iPod Touch sold what, about 30 million in 2010? Even if they sold 40 million. The mobile phone handset market sold far in excess of 1.3 Billion. The elephant is the mobile phone, the ant is the other iOS devices. The are so small, they are utterly irrelevant in the sales of digital units, lost in the rounding off error of the total market size, when compared to total phones. Of the world's total population, less than 1% have any kind of non iPhone device that has the iOS operating system. Less than one percent. But 61% of the planet has a mobile phone. Please understand the total difference in scale. What you are interested in, is of course of interest to Apple and Apple fanatics, but in the world of digital convergence, neither iPod Touch nor iPad is nowhere in the scale of generting any interest, except for US based tech pundits who love Apple products..

Timo - good points and I see a lot of merit there, thinking from the start-up point of view. My argument is in return, if the development costs are 1/10th the size (WAP vs App) and all operators already have WAP portals of some kind, where there is FAR LESS congestion than on the app stores with hundreds of thousands of choices - I would think the start-up has far better chances on mobile web than doing an app. What the app store environment DOES provide (as a very long-shot opportunity) is the free app method of getting some visibility. But that to me is still better done on free mobile web rather than free app. But we have to see as the numbers pan out and we get more comparative data.

Tim - thanks! And I appreciate it that you took the time to write. I am 'mature' enough to understand that for every comment left here, there are 10 or more who liked it too but didn't leave a comment, so I am always happy to see the visitors (I see the stats on the blog metrics) and then to see what kind of comments have been left, except occasionally when some leave inappropriate comments haha..

Stephanie - haha, boy you are precise... :-) But yes, I did mean, that XHTML is counted, as is normal HTML and yes, I am happy Opera releases pretty good numbers and they are included already in the stats.

Alex - hey, thanks for the statistics update! Very good numbers.. :-)

Thank you all for the comments

Tomi Ahonen :-)

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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