I was a panelist at the Digital Hollywood Fall 2009 event, held at the Loews Hotel in sunny Santa Monica, CA (that's a picture I took on my iPhone of the happy hour event above).
Now there is a new world of mobile and broadband interaction, familiar to almost everyone - Mini-Apps, Social Apps and Widgets. For the uninitiated, the Mini-App is a miniature application or website that resides as a component element on a user's desktop, social media page or mobile device. A button on a user desktop may open multiple Apps, so that in a flash, mini-apps open to reveal up-to-the minute stocks, the weather, airline arrivals, a dictionary, your photo album - virtually anything, any data type - can be formatted into a mini-app. Once the user gets the hang of it, life without mini-apps is impossible. Mini-apps are as addictive as email. Mini-apps are your mini-obsessions managed and delivered as desired. Add in a layer of commerce and you have a fully featured digital ecosystem. Watch out! Mini-apps are here!
Here is a transcript of the event:
Subj: PointAbout on Digital Hollywood Panel: Mini Apps as the Next Platform Explosion
Where: Loews Hotel in Santa Monica, CA
Date: October 14, 2009
JM: Jake Martin, Marketing, iSkoot
CR: Carl Rohling, Esq., VP, Business Development, RadioTime
SG: Seth Gerson, CEO & Founder, Last Legion Games
DO: Daniel Ruben Odio-Paez, Co-Founder & Chief Operating Officer, PointAbout, Inc.
AS: Amnon Sarig, Co-Founder, TuneWiki
GY: Gary Yentin, Consultant, Global Media and Entertainment, Moderator
US: Unidentified Speaker
Gary Yentin: So, good morning. I think we're going to start, because we have a really busy session; and, we have a limited time. So, thank you very much for coming this morning. And, welcome to our interesting session, an exciting session all about applications. And, my name is Gary Yentin, I'm the CEO for Cipher New Media, and we're a mobile boutique consulting agency for all things mobile.
We have a really good panel today from many disciplines in the mobile ecosystem. So, we'll start off by introducing our panel, and we'll just give you a quick overview of who they are, and what their role is in the company, and, what they're going to be talking about today. So, we'll start with Daniel from PointAbout.
Daniel Odio: Good morning. My name is Daniel Odio; I'm a co-founder and Chief Operating Officer of PointAbout. You guys are all the early risers, so hope we can have some fun. We are about 70 per cent - custom application development shop; we work with companies like The Washington Post, Politico, Burger King, cars.com, and other big brands to make apps for them. And, then were about 30 per cent - product. We have a web service called appmaker.com that allows us to take RSS feeds or other types of X, and all feeds, and quickly make apps. So, we made an app for Guy Kawasaki, and Maclife, and Army News, and a bunch of other clients that way.
Seth Gerson: I'm Seth Gerson. I'm the CEO of Last Legion. We are a cloud-based games technology company. What we do is we enable micro-transactions at the cloud level. So, we let people take, create an avatar; if you've seen something like Second Life, you can create an avatar and you can buy goods for it. But, what we allow them to do is take that avatar into any game that they play that uses our system.
Carl Rohling: Carl Rohling, from Radio Time. What Radio Time is, is a worldwide internet radio guide; so, it's a service that powers internet appliances, portals, set top boxes, connected TVs, and, we found a great niche in using our service to power apps. And, so we power several of the top apps on the iPhone platform, Blackberry platform, but, really, the heart of the service is a worldwide internet radio guide.
Jake Martin: I'm actually not Mark Jacobson. My name is Jake Martin, I work for Mark. And, he could not be here today, but he sent me down instead. I've been marketing for iSkoot, and somebody may know iSkoot as the company that brought Skype to mobile in the short [?] back in 2006. We did the first carrier-implemented Skype application in 2007; and, we're now delivering a number of social networks and microblogging services on devices across the AT&T network currently, and [...].
Amnon Sarig: Hi, I'm Amnon Sarig. I'm the President of TuneWiki, and we're in the business of re-monetizing music, and it's not a little thing to do. [Laughter]
GY: Since, it's all about apps, why don't we get kind of a measurement of the audience. Who has an iPhone? [A lot.] Wow, that's really interesting, it's very telling to the session. And, have you downloaded apps?
US: We can't in this room, because we get no signal. [Laughter]
GY: OK, right. Outside of the room have you downloaded apps?
GY: Yes. So, who has a Blackberry?
US: This works for Europe, but I don't have to pay $400 a day, additionally, in Europe. That's the problem.
GY: OK. And have you downloaded apps on the Blackberry?
GY: See, very interesting. Any Android people in the audience? [To Amnon, "You have everything."] [Laughter] Interesting, as well. How about Nokia? So, clearly, just by our little survey it's all about Apple, and, it's all about apps, which is interesting.
But, we want to explore the different ecosystems and find out of in terms what people develop, or why they develop for that platform. In terms of Apple, clearly it's the winner, and I think it sort of goes to iTunes because the ease of downloading and the monetization of the actual content is very simple. But, I think it's interesting to see that there are other players out there, and perhaps they're not there today, but it would be interesting to come back in a year from now to see how Blackberry is doing and how Nokia is doing, and how Android is doing. But, we'll discuss that a little bit further in the presentations today.
I've asked some of the team, the members, to have a small overview of their companies, so some of them do have presentations on their laptop which I'd like you to see; so, if you'd like to show your presentation, that'd be great.
DO: Sure, I'll make this really quick because the goal here is interactivity, not lecturing, right? So, we are PointAbout, and, actually I wanted to show you some stats about the marketplace. Mary Meeker, who is an analyst from Morgan Stanley, has an excellent presentation that is available on our website; it was on TechCrunch the other day. She shows how the iPhone has been the most adopted consumer electronics item in history. You can see that the red line is the iPhone; below it is the Nintendo Ween and Nintendo DS, Sony PSP; the iPod is actually above the Blackberry; the yellow line a the bottom is the Blackberry.
Now, it's a very exciting time to be in apps, and we focus on iPhone and Android, and I know some of the other panelists focus on the other phones, so they'll be able to talk to those. We believe that in terms of apps, the iPhone is the only game in town right now. There is an interesting Gartner Group report that says that the Android is going to out sell the iPhone by 2012. We believe that to be true. Android, which is Google's operating system is on multiple handset manufacturers, multiple carriers; we think it's going to be a lot like PC versus Mac - there's more PCs in the world, although the experience may be better on Mac.
We think, personally, that's what's going to happen with the phone landscape, but it's going to be very fragmented. Some stats from our friends at Medialess that do analytics and advertising, this number of apps has since risen to 85000+, it was 71000 as of the 31st of August. You can see how the iTunes Apps Store compares to the Android App Store - 72000 apps versus 9000 apps, and how that compares to the Palm Pre marketplace which had 32 apps. You can see the disparity there. So, just about PointAbout, quickly.
Like I said, we do custom dev work. This is an example of an app that we're doing for Kohl's; we actually like to take this custom work and load it into our AppMaker service so that it can become a template. So, Kohl's is actually not our client - our client is a committee called ShopLocal which is based in Chicago. Kohl's is their client. So, we are enabling ShopLocal to offer a mobile solution to their client with their feeds, that they can then re-brand, so they're doing Publix next, for example. So, we believe in disposable-like applications, we think that as kind of this whole flagship app thing passes, companies are going to start doing a lot of lightweight disposable apps which is not possible today, because it's so custom-consulting oriented; we're trying to productize that with our service.
Another example is Fishbowl, their client is Dine Florida; again, this is a custom app that we did one time, gets loaded into AppMaker, becomes a template, can be re-branded for all of their clients. And then just a few other apps that we're doing - Washington Post, we doing their flagship news app, and we're doing a lot of the disposable apps for them. This is coming out in the 4th quarter of '09; Politico is going to be released soon, and some of the apps we've done in the past, we've won a 'Webby' for an app that we did for the Obama inauguration; and a couple others. And, that's it.
GY: Great. Thanks very much, Daniel; and Seth has a small presentation, as well.
SG: I'll show a quick video. [Initial difficulty getting the video to play.] So, we focus on basically two numbers when we look at statistics. We just look at approximately 45-to-48M iPhones plus iTouches; and then we also look at the half a billion number. So, if you take the six developed countries, or the six most developed countries in the world and you add those together on Flash, you get about half a billion users. In other words, Flash is pretty much ubiquitous with PCs. But, what we do is we focus on the cloud, because we see apps moving on the cloud, so we're a game developer and we're a technology company. And, as we develop games, what we do is take our game and our templates and our engines and all the code that make that game, we actually give it away to developers so they can make any game they want - it's free. All they have to do is use our microtransactional store. And we give them all the ability to basically take those microtransactions and then to use them for whatever they want. And there's a full avatar system that they can use, and they then can go in; and, consumers can take one avatar and they can use them in a bunch of games, and developers can actually have a store.
So, I'll just show you. In the game I just showed a video of, there were about four million different combinations that you could create for your different avatars. But what we do is we save developers time, we save them 'man years', it's very cheap for them to make it, but more importantly, we base everything on the cloud, and we actually draw all the pictures that you see on your phone, and on your Facebook page, and everything that you do, we actually draw those on servers in the cloud. So, Amazon is the largest cloud provide in the world right now; we do everything on Amazon. So, here you can see this little guy, and here you can see an example of our store tool. We put all these out on the App Store; we test them commercially, and then we give them away to developers. So, each developer can take our tools, they can make their own little store, and this particular app was called 'Polyghost', it was the first free-to-pay app that was released on the App Store last week. So, that's pretty much it; and our goal is to allow a free-to-pay model for anybody that wants it, but we also won't allow anybody to basically use our tool sets and to create content. And, in games it's a bit different, because for the first time, we're a bunch of ex-console guys. We made a lot of the, if you've played PlayStation 3, or Xbox 360, or any of the consoles out there, going all the way back, we used to make a lot of games for that.
And what iPhones allowed in the market is they kind of changed the market, and the same for the Facebook apps, because it used to be when you were creating a game, and you were creating content for that game, every time you were making an art asset, you were effectively losing money, because at some point there's a law of diminishing returns is to whether one animation or even a thousand animations is going to make a difference in any given game. However, it's very expensive. So, what we've done is we've allowed developers and artists to go out and to actually monetize their work for the first time. So, any developer can go out and they can create a model, or they can create a shirt, or they can create a cloak of invisibility, whatever they want to create, and then can actually monetize that.
GY: Great. Thank you. Carl, just maybe talk a little bit about your company; the questions that we were asking in terms of right now you're developing for the Macintosh, correct? You develop for the other platforms, as well?
CR: And so, my approach is unique; and, a lot of people are probably familiar with Pandora, yes? [Yes] It's a service, RadioTime, the simplest way to describe it is Google for internet radio - anything that is available on broadcast that streams around the world is organized like a stream wrapped with metadata that has some intelligence behind it [...], what you're looking for quickly. So, its focus is really on broadcast radio; it's not a music service; there's Slacker, there's Rapsody, there's Pandora, there's Napster. You can go on and on about music services, but, we're about organizing talk, NPR, BBC, sports, you want to find out where the Anaheim Angels are playing the New York Yankees stream - you would use us. And, this particular topic that we're here for, this is an absolute explosion; we almost increased our traffic by 300 per cent, by using apps.
And, one of the difficulties is you can't just say, "You build an app", and it's ubiquitous. We started by supporting iPhone developers back in November of last year; and the very first one we did was a company called 'Weather Underground', up in San Francisco; and they have a product called, Wonder Radio', has anyone heard of this, Wonder Radio? So, it's an app developer that ties to or service, but they were, I think they're still in the top 50 grossing apps, in the App Store today. So, it was a success for them, it it's a success for us because the distribution was, I think they're up to 300K or 400K apps that were sold. That's one model; there are other models out there, there's another great player out there called, 'TuneWiki', and we're also working with TuneWiki who has a different model. One thing that I'm learning is that there are premium apps to sell, and there are also apps that are downloaded for free. And, one of the decisions you have to make is which route you want to go. So, we also now are supporting Blackberry; there are a couple of apps that are up on the Blackberry. But for us it didn't really end there, it wasn't about mobile, apps are also ported to connected TVs, and this whole concept of shifting a service like Radio Time is similar to the Pandora. How do we get RadioTime now on connected TVs? And now we have to worry about supporting Flash, and we have to worry about supporting CE-HTML.
So, we're really participating in all of these different platforms, because it's simple - people can quickly add our service, it's free; you can see everything on Radotime.com today, but now you can get it on your Visio televisions, you can get it on your iPhone, and it's simple. It's very simple to get, download, and you don't have the barriers that we historically connected to end-users. For instance, if you heard of 'Sonos', or Logitech 'Squeezebox', or Linksys has a product line called, 'Wireless Home Audio.' We power that same radio experience for these devices, but you have to go out and but a piece of hardware, you have to worry about networking, and the volumes just weren't there; whereas an app, if you can have a successful app with a service provide like us, you can really get your service out quick - and, cost effectively.
CY: Great. Just curious, what's the typical engagement for your users; how long do they actually work with your service, or user service; is it like house per day, or how often do they use it?
CR: When someone initiates a stream, they're listening to programming, and so, it's upwards of 50 minutes per, so today we connect 25M people to streams a month. And, on average it's for about 50 minutes. But, we're a guide, we're no different that Google, we hand the person off to the underlying content. We don't go out and license 30K stations and programs, we hand it off; but, it's a pretty good engagement when we do make that connection.
CY: And, Jake has a presentation for us, as well.
JM: And I just promise this will be brief, it will just keep me in line; and keep you distracted with pictures. Everybody wins. First off, as you know, I'm not Mark Jacobstein, so I did not cofound [...] chocolate, I did not serve as the COO of Boot, and I did not bring the first online fantasy sports games to market. I have done a whole bunch of consumer marketing in my short time, so, that's really my focus is, where the market is going, and what do people want. My company is obviously is iSkoot; we've been a round for all of three years, which feels like a lifetime. [We] launched the first mobile Skype solution way back in 2006, and the first dedicated Skype handset with 3 Mobile in 2007. Obviously, they're UK-based; we're operating that handset with about eight different geographies worldwide in Europe and Asia. [We] extended that partnership in 2008, and then this year, launched with AT&T, the AT&T Social Net.
Those of you who have televisions probably haven't been able to escape. [Plays a short audio clip] What's really important here is the 'Use Case' more than anything. And that's kind of what I'm going to dig into. So, obviously, we like social media, we think it works in mobile, and we like smart phones, too, for a few reasons. They're probably the reasons you're familiar with. For starters, they're always on, and then they're always on you; and if you were here last year, you know that I said that they're, "really not PCs in your pocket", but they can do a few things that PCs can't do, like take a picture right now, and I've seen some people trying doing that, and I'm floating with Facebook right now and telling my friends where I am right now, because they have GPS chips in them. So, they're really, actually, ideal social media devices.
Believe it or not, 65M people accessed Facebook by mobile apps last month, September 2009 - that's a lot. It's nowhere near the 300M people who access Facebook worldwide, so there's still a lot of growth there. And, take it for what it's worth, there's actually a relatively interesting Fortune Forrester last week predicting that mobile devices will, "Will increasingly become the glue that holds the social graph together." It's a bold statement that I think makes a lot of sense, cause I'll be honest at least for myself, when I'm in front of my computer, I'm not that interesting. It's when I'm out in the world actually doing things and seeing things that I have something to share, and the device that I have with me then is not my PC, it's my mobile. And, probably for me, at least, the most important part is that when that happens, it's going to be when 'sent from mobile' isn't code for I have an iPhone or a Blackberry. Lets' get there, because probably the biggest issue for me thinking how do I address this market is, well, "Gosh, what is a Smartphone?"
Last year I said it wasn't a PC; this year I'm going to say, "I'm not sure what it is", because you could say it's the world's 'Os Space' - it's running on Android, or maybe it's because it's got a camera with x number of megapixels, and the GPS chip, and that makes it a Smartphone; or maybe it's because it can download a bunch of apps, but a Java-based handset can now download a bunch of apps; a Bru-based handset can download a bunch of apps - so where do you draw the line? And, in some ways I really agree, the smarter the cloud gets beyond the basic level of functionality, the less smart a handset needs to be. So, for me, the big indicator for when the social graph goes mobile, is really when do we stop talking about Smartphones? Inevitably, that line is going to blur beyond recognition; every phone is smart, and, at that time, the network effect comes into play. So as long as iPhone or Blackberry are sitting in a room together, it's not really that social; it's a lot of users, but a very small percentage of people who are actually on social networks.
And, that 'lost dog use case' doesn't come together until everybody can play, which is really kind of what iSkoot has staked its bets on, so, I can't really call it hedging. This is a little peak at where we are in development, and in terms of platform maturity, we launched on Java, we launched on Blackberry, we launched on Bru, we were one of the first apps on the first day that the Android market went out, we were there. There's obviously one platform that's conspicuously absent here, and we'll probably get into that in the Q and A. But, that's our five-minute perspective.
CY: Thanks, Jake. And, Amnon, do you find.
AS: I didn't get the memo on the presentation, so, I'll do something live. Raise you hands if you looked for lyrics on the internet this year. Go ahead, don't be shy. [Laughter] This is the number one search on the internet of a thing. The number one word on the internet is the word 'free.' Guess what? The number two is the word, 'download.' Number three is, 'lyrics.' Number four is, 'sex.' So, we do free download of lyrics and leave some growth of opportunities. [Laughter]
We took this idea and another idea that came from the fact that every second there is three babies and 30 phones born. And we took the absolute revolution of all those guys are newcomers to application reform; we were the first serious 'jail-broken' application on the iPhone, the first to close $1M on a 'jail-broken' iPhone, the first who got $1M on a legit iPhone within, I don't know, within 5-6 weeks. People want music, people want lyrics, people want to move with the music and not be tethered to their PCs, or whatever they are. And, God bless Apple for showing everybody four different industries that they shook with this iPhone. One is, of course, the music; the second is the mobile phone; the third is gaming on the go[?], and the fourth is advertising.
But, I'm looking at the marketplace and the iPhone is an expensive thing. There are about 4 billion phones on the planet; iPhone is a very nice surrounding area. Yes, all phones will not be stupid and smart, all phones will be able to go and do some things. So, we looked at this trend and we decided that we would take the music [...] that everybody is still [...] that they sold one billion [...] last year - that's great; 99 billion were stolen. So, we looked at the fact that music is free, and instead of making it a fish, we are making it the hook, and we reel the clients in, we reel communities in, we take it into a social, instead of isolated experience, you disconnect from the words when you put the headphones in; we allow to see what your friends are playing; we allow to see what people are playing in France; we allow to see what the number one song in - it's a Chinese song, but half a billion people think it's a good song - it is good song. We allow you to translate from one to the other.
You talked about the Android. We won the Android competition, because we were one of the best applications on Android; why, because people want music and lyrics and social network. So, we take this trend that people want music for everything, they want it for free, free is the number one search on the internet. And, we are building a platform for monetization of music, as what the music industry is struggling to do, and I'm coming from the music industry; I'm one of the bad guys who monetized music for years. And, we look at this and say, "OK, you cannot sell music, that's very nice, use the music to bring the audience for something called '360 deals'." We create the monetization platform for music by giving it for free, and, because you hold the phone I know where you are, I know what you're listening to, I know what you like, I know your trend of listening; I know what your friends are listening to, because you look to your friends. You're listening to Britney Spears in your hand, and you're in Los Angeles, and she has a concert two months from now - here's you ticket, here's your t-shirt, here's you lyric and sheet, your translation for your friends; here's your game. So, that's what we're trying to do - bring back monetization opportunities to the creation of music, because music all of us know is the number one consumed and determining the work.
Just to give you some metrics, of course they're not words, they're whatever - 87000 applications - the links of life of an application on an iPhone is average eight days, most applications are downloaded and never used, never, ever. To find an application on iTunes is an act of God or a miracle, [laughter] or both. But, if you do something that has a value, has a community, and it has an appeal, Apple will feature you, and Apple featured us; within four hours we were the number one application for music in Japan, in Holland, in Italy and Greece, number two in America, number two in Canada - it is all about, there is a problem of a gatekeeper that's called Apple, and total clutter, and we'll probably talk about it later.
CY: Yeah, which is a good question, and one of the questions I pose to the panel is you field these great applications, but with 85000 applications in the store, how do people find you? So, I think you talked to one of those points. It is very difficult, it's great to get Apple to sponsor you and to support you, but, you're very fortunate, you have a good app; most people don't. So, if you're one of 85000, what do you do? I think that more and more people are starting to realize it's not just about the applications, it's about the marketing and promotion of the applications. So, do you, have you guys thought about putting marketing dollars to your applications, or are you working just Apple to get that exposure?
AS: Well, there are one million applications of the PC, so what? Good stuff always works, and the fact that you have applications doesn't mean you stop marketing, you stop selling; we do a lot of viral, but viral costs money.
AS: If you behave like you're a business, and you behave like iFart, that's OK. But, if you behave like you're a business for a long time to build value, to bring something that the consumer really wants more than the hiccup of the day; then you have to behave in the marketing and advertising and selling, and all of the above, nothing changes.
GY: I'm very much in agreement, because I think what people forget is that you're starting this engagement with the consumer, hopefully, it's a long term engagement. You've got them to download your application; you don't want them to leave. You've spent all that energy to get them to be your customer, now what do you do afterwards? So, do you plan to do additional upgrades, or how do keep that customer interested in your application?
AS: Well, music is still after what, two, three, four, seven days? We make sure that you get more experience with fresh music all the time. We talk to all the labels; they are really just looking for new things. So, we make games for music, we make challenges for music, we make competition, people are our competition; we make social network around music, so we make reasons for you to stick around, and it's very hard.
DO: Our rule of thumb is that as much money as you spend on development, you should spend an equal amount of money on marketing; so, it's a 50-50 split. And in fact, it was Ken Berge, the creator of the wildly popular iFart application about a year ago that originally came up with that - it's been a good rule of thumb for us. It also depends on your brand, if you have a well-known brand, you're going to be able to: a) monetize it more easily, b) just distribute it more easily because you tend to have the distribution vehicles if you don't have a well-known brand, you really have to think through it carefully. It's not a, "If you built it, they will come" scenario, unless it's just amazingly good.
GY: I also want to talk about brevity streams, and Seth has an interesting angle within the Free-op to be able to upgrade and by purchasing, so I think that's a continual revenue stream, so maybe you could talk a little bit more about that.
SG: Sure. So, we focus a lot on free-to-pay. A lot of our product also is sort of studio-brand in content, so we have 'Pet Cemetery' that's been accepted, it'll be launching this week. But, we look to do is, we look to give the consumer a good experience in the beginning, so they continually come back. And, then, by being able to take avatars across multiple games and continue to grow those avatars, if you gain experience in one game, and you do well in that game, when you take your avatar to another game, you can also do well. So, one thing is that we try and create a lot of value in the actual purchases they make, so if I buy a particular weapon or item in one game, I can use that weapon or item in another game. So, we look to create value in each individual item that people but, and allow developers to actually create in those items, so that people find them worthwhile and they can use them across a platform games.
DO: And one thing that Seth said that I just want to key in on that you may not be ware of, is Apple just made a change in their rules. It used to be that a free app had to stay free, meaning that you could not charge inside of an app that was given away for free - they just changed that last week. And, that's a huge deal; now an app can be free, but you can buy a level, or you can and avatar, or you can buy a service; and I don't think that any of us have really seen the impact of the effort[?], we think it's going to be huge.
SG: It's very early. Polyghost was the very first free-to-pay app. We put it out; it went live the same day that they made the announcement. But, what's interesting is, we're seeing, just from early numbers coming in, and it's probably too early to really make a judgment, but what we're seeing is exactly the same ratios that you find in free-to-pay; we're seeing everything on the high end of those ratios. So, typically, if you look at games on Facebook, you'll see about two to five per cent microtransactional fees on people coming in and paying. We're seeing this on the high end, maybe even going over the five per cent range.
So, what's interesting is that all the statistics have shown that a lot of people who download apps, when they download them, basically, a lot of them don't even plan. We're seeing that to not necessarily be the case with free-to-pay; but another thing is that I think it's interesting on the 'Freedom K model' is piracy. Because, this is a model that you hear everybody complaining about piracy all the time, and with our model, we embrace piracy; if people steal the app, we obviously don't want them stealing intellectual property, but, the interesting thing is pirates value their time, too. So, they'll go out and they'll buy an extra sword, or an extra pack of grenades, and they'll but other things because they want to be competitive and they might not have the time to earn it. So, that's pretty much what we focus on.
GY: Great. I think one thing that Jake had talked about is the social media, and the social graph. I think that especially with application in terms of being able to do things virally, and to have a friend see it at Facebook Connect is a really important feature. So, I guess you guys chose the social side of it as an important portion for your application. Jake?
JM: Absolutely. In some ways, I'm a happy gamer myself, but, it's one of those things we like, say, internally is that, "The most interesting game is the one that we're already playing." And, those social interactions all give reward in different ways. So, we definitely have staked a kind of a big chunk of our future on our expectations and will want to continue on doing that in the ways we discovered, really only in the last three or four years; and that mobile will be the way that it happened.
Thinking out loud a little bit, if we think of the Smartphone platform as a big driver of data, and right now, I think it's something around 20 per cent of handsets are eating the typical 80 per of data. There's a whole lot of opportunity left for carriers there, and so for us, when we think about monetizing, it's less about how can we get our users to pay up than how can we help carriers make money. And, what we can do to help drive usage of that a data network is more valuable to us in some ways than what we expect from the individual user.
GY: Carl, you mentioned that you have a lot of different radio stations and information, do you collect the data from your users; are you able to see what they're streaming and what they're listening to, and you use that as a tool for advertisers to be able to buy it across your application?
CR: Yes, yes, yes. [Laughter] Actually, I have question that came up from sitting and listening to the panel, but, yeah, we monitor what, in aggregate, people are listening to where we can target ads so that if somebody's listening to World Cup soccer in France, they're not getting a major league baseball ad, they're going to get a local ad, sports-related. One of the questions that I was thinking about while I was sitting here is how many people; we're a service, and so it made a lot of sense for us to make an app out if it. TuneWiki, I found TuneWiki when I was using it on the PC and at some point in time we made a decision to make an app, and it's been a huge success as an app, but there are a lot of services that I've used that have made apps, or they come to me and say, "We're thinking of making an app", which made no sense whatsoever.
And, I don't know if the audience is here to learn about how to make money in apps, whether they should make an app, but I think it's starting to get, there's a point where you don't need an app for everything. I can think of somethings like there is an app for epicurists, for example, which I never would use recipes for cooking on my iPhone; I still have no problem with my PC. I just threw it out there, like, there is really an app for everything, for your bill on your iPhone, to your, what did I see the other day; I can't think of anything that doesn't have an app that they haven't at least thought about, "Should we make an app for the iPhone for this particular service?", and I think at some point in time it really doesn't always make sense.
GY: I agree with you. I think that you fundamental points that what people would have to think about when they build it is it has to have some form of utility, cause there has to be a purpose, or it has to be entertaining.
Yeah, I think those are the two features that people have to balance off, so, we have 15 more minutes left, so I wanted to open it up to the audience for questions, and fell free to ask the panel, which is a very esteemed panel. Your questions - go ahead.
US: I wanted to ask Daniel, so, what you said is that when Android comes out and it sits on all the carriers, that that's going to be a problem for AT&T and iPhone, that they're not going to be able to maintain the competitive edge?
DO: Well, to repeat the question, just to make sure that everybody heard, the question is, "What effect is Android going to have on the marketplace?", and it's our belief that there's going to be a lot more fragmentation in the app space. Right now, if you're the CIO of a company or if you're trying to figure mobile out, you really just have to think about the iPhone in terms of apps. But, Verizon is picking Android up, Motorola Htc, Samsung are all making Android phones, and so Google is not going to be getting rid of their operating system, Apple's not going to get rid of theirs, Microsoft's not going to get rid of theirs, so we think that within a couple of years, you're going to have a much more difficult decisions to make in terms of making apps. That's a problem that we're trying to solve with AppMaker is being able to make one app and it works across multiple devices. But, that fragmentation issue is just going to be more difficult, I think for you, even than it will be for Apple.
One other thing that we always recommend from a strategic perspective is the difference between mobile web and apps; and, the way that I like to say it is mobile web is like a lake - it's wide, but shallow, so you get a lot of distribution across a lot of different phones. And, if a phone has a browser, then it's able to access content from the web. Apps are like a well, it's narrow, but it's very deep, rich functionalities and things like the camera, GPS, accelerometer, augmented reality. Who in this room has heard about 'AR'? So, it's maybe half, which is very high, compared to most audiences; I can guarantee you that in a year everyone is going to be talking about it. So, that's what apps are good for, so if you're trying to figure out a mobile strategy, although, we're talking about apps here, I think you really have to be thinking about both the lake and the well.
US: I just want to ask one thing, what is this going to do to AT&T, the Android?
DO: Honestly, personally, I think it's going to help them not have their network die [laughter], because, the iPhone has killed AT&T's network. If you go to San Francisco or New York, and you try to use the iPhones, it's always on Edge Network. Mary Meeker had a stat that the iPhone has increased their network usage by 4982 per cent, and so with other phones carrying the Smartphones, and with the iPhone possibly going to Verizon, AT&T kind of needs the break, they're just not able to keep up with that, that's my opinion.
US: I just wanted to [...], I don't know if you got the thing this morning in the news that just came out before I came here where Capitol Hill had decided that they were going to look into the whole carrier-internet situation, and that they were talking about that was going to probably develop the odd phone and AT&T deal.
DO: Yeah, it's probably going away soon anyway. Apple doesn't want to be tied just to AT&T.
GY: In other countries, I'm from Canada, we have our three carriers and they all access to the iPhone, so I think it's going to open up, and it has to pretty soon.
AS: Isn't that wonderful that Congress needs to get into these kinds of questions? [Laughter]
US: A lot of congressmen were saying the same thing, they don't feel like they need to, [...] Republicans, they said that they are, so, that was their consensus.
GY: You had a question?
US: Yeah, I just had a question if you do have a valuable app that is entertaining and has a purpose, how do you get Apple to return that app?
AS: You beg, you steal, you run, you blackmail [laughter], you fall, and now you know and then you don't get published anymore.
GY: It's tough, but I think you have to really understand a little bit about Apple is that they get thousands and thousands. Anything that shows off the features of their phone - the accelerometer, GPS, or that really pushes the limit, that's the stuff that they embrace, and that's the stuff that they'll promote. But, if it's just, as you were saying, the iFart app, I don't think you're going to get on the top of the list. [Laughter]
US: But, it's never a case of reaching out?
GY: No. You have to be proactive; they have more than you have.
AS: The three guys there who decide what goes in and they're totally overwhelmed.
US: You talk about very difficult ways to actually find apps on iPhone, is there anybody on the web who had an App Store that's not iPhone that says this is how you can access them and here's what they do, and any kind of database which organizes all the apps?
GY: There area other stores, the problem is it always takes you back to the iPhone Store, and most people buy apps from their phone directly, so when you're looking for apps because you're searching on the phone versus searching on the web; so, I think you will see other stores, there's a store called 'GetJar' which aggregates thousands and thousands of apps, but the problem is that it takes you back to the iTunes Store afterwards. I think it also comes down to what people are buying on iTunes, it's just a payment is so easy. And, I think that's really probably one of the biggest reasons why Apple was so successful.
You don't think twice about downloading the application for 99 cents; also, when you used to buy content from you're your phone with a carrier; you would get your bill a month later. And, you don't remember what you bought, so you get all these itemized charges, saying, "Did I really buy that?" Apple is great, because when you buy something off iTunes, you get a receipt next day in your email. So, you have an itemized receipt of what you bought, there's no question, did I download it or did I not? And, if you think about it, Apple has a no returns policy. What store has that? It's very interesting.
DO: One quick comment is that Apple actually has an affiliate program, and every iTunes page has its own link, so there are companies out there, I think it's the 140apps.com, or something like that. But, there are companies out there that are aggregating the different links and using the affiliate program to make money. There's an interesting SCO opportunity out there, that I don't think has really been tapped yet, it's such a discoverability issue, so I think there is an opportunity to figure out on the web how to really drive a lot of traffic to iTunes. But, for those of you who don't have iPhones, iTunes is the only way to download apps; you can't do it outside of iTunes, which is different from some other.
GY: He has his jail-breaking; you have [Multiple speakers at the same time].
AS: [...] there's an app for that, a friend of mine has just created an application to find applications through your social network. Because out of 85000 applications, you look on other people's phones, and what do you have?
DO: Big opportunities there.
US: So, a couple of weeks ago, AT&T finally relented it to allow Skye to run over the data network, and now with the big push for net neutrality a lot of people are predicting the end of the 'all you can eat AT&T iPhone data package.' If that happens, how is that going to affect your businesses, all of a sudden people are having to pay a ton of extra money to pump that data [...]?
JM: Assuming that that is how it plays out, that will be fantastic for me.
JM: Well, as I showed, iPhone is one platform that we're not developing on right now. We do have a pretty large bet to place effectively that feature phones are going to get a lot smarter, and if the effective price of using an iPhone goes up quickly, that will only help.
DO: I honestly don't think that's going to happen. I think there's enough competition out there on the different platforms, and Android's ramping up quickly enough that you're still going to be continuing pressure on AT&T to offer all you can drink.
JM: And, I would say exactly where that's leading, is that really what we're talking about is not a device capability revolution, it is a big disservice rather than a revolution, and that is coming not just the iPhone, but really across the board.
SG: If we were sitting in this room seven years ago, everyone would be focusing on the last mile, I think. Everybody was saying, "Focus on the last mile!" But, I think there's another big change happening which is that the cloud commuting is really changing the landscape, as well. So, if you look at the different cloud computing services, if you're an applications provider, it's really the other 12.5 thousand miles that you have to worry about or half the circumference of the planet; because, that's how you're going to get your data from one point to the other. And, if you're using these cloud services, they now have integrated software that pushes data so fast at data centers. We just, to give you some idea of data transfer, on that Watchmen game that I showed you, you can actually run an MMO over Edge. So, that is a teeny amount of data, so, I don't know that it really destroys the landscape, so to speak.
DO: One kind of related thing that Pizza Hut did that you should be careful about if you're thinking about making an app, is that they pre-loaded their app with all the media assets. And the app is over 10 megs, which you may know that Apple does not allow over the data network, and not to be downloaded, or anything to be downloaded if it's over 10 megs; and so, users had to tether their phone to iTunes to download the app, which really hurt their downloads, so, that's kind of an interesting aside.
GY: Go ahead.
US: I know this has been discussed, but I'm just trying to [...] bring this up.
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This week, Facebook Home, an Android app that will change a user’s phone home screen and core features, will make its consumer debut.
Facebook's Home initiative is the latest salvo in the mobile engagement battle, which has been looming since the introduction of the iPhone in 2007, although most are just becoming aware of it now. In fact, the 'engagement crush' is just beginning and will get much worse in the next few years.
This issue is so significant that CEOs and CMOs of Fortune 500 companies are going to find their jobs in jeopardy if they don't take immediate and decisive action to launch a meaningful mobile strategy for their companies. Many companies mistakenly think their businesses do not have anything to do with mobile, but that's incorrect: Mobile devices like smartphones and tablets are the way consumers and businesses will interact with brands and each other. This means that every business needs to have a coherent mobile strategy that at its core considers how its customer base will want to interact with it using mobile devices.
I mentioned last week that I had a deadline which I was working towards. I'm going to explain a bit more about this because a) it's consuming my life these days and b) I have the feeling this is going to be the beginning of something big. If it is something big, I think it might be interesting to hear it from the beginning.
What is Y Combinator?
Y Combinator is a "startup accelerator". Since that doesn't mean much, I'll explain how it works. You and your cofounder apply to Y Combinator. If they like you and your startup idea, they give you around $20k in exchange for a small piece of your company.