Twilight Session: September 2010 Emerging Trends Mark Fowler Act On Insight

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1 Twilight Session: September 2010 Emerging Trends Mark Fowler Act On Insight Act On Insight Limited 1

2 Act On Insight (BETA) future state catalysts Scanning the emerging future Strategy transformation Facilitation 2010 Act On Insight Limited 2

3 x x x x x x x 2010 Act On Insight Limited 3

4 time 2010 Act On Insight Limited 4 Discontinuity return on effort

5 2010 Act On Insight Limited 5

6 2010 Act On Insight Limited 6

7 Global smartphone market to grow 55.4% in % Source: Worldwide Converged Mobile Device Market Projections Raised 10% for the Year, Says IDC IDC 7 September Act On Insight Limited 7

8 Heads roll as Nokia prepares for iphone war Nokia has been thrown into disarray, with its top two executives announcing they will be leaving the company on the eve of its biggest event of the year, Nokia World in London CEO Olli-Pekka Kallasvuo EVP Mobile Solution Unit Anssi Vanjoki New CEO Stephen Elop 16 June 2010: Profit Warning. Stock lost 9% in one day 26 June 2010: MeeGo to replace Symbian on SmartPhones Former president of Microsoft's business software group 2010 Act On Insight Limited 8

9 With ipad, Apple is No. 3 in portables When including the ipad as part of the notebook market Apple leapt over Asus, Lenovo, Toshiba and Dell in terms of global unit share Chris Whitmore Deutsche Bank Source With ipad, Apple is No. 3 in portables Fortune 2 August Act On Insight Limited 9

10 The ipad is cannibalizing notebook demand Remarkably, Apple's traditional MacBook business posted accelerated unit growth on a Y/Y basis in 2Q despite the launch of the ipad while every other Top 5 vendor slowed. Source With ipad, Apple is No. 3 in portables Fortune 2 August Act On Insight Limited 10

11 With ipad, Apple is No. 3 in portables The ipad is directly cannibalizing demand for other vendors' notebook products Source With ipad, Apple is No. 3 in portables Fortune 2 August Act On Insight Limited 11

12 Strong Apple share price growth momentum over the last 12 months iphone 4 24 th June 2010 ipad WiFi 3 rd April Act On Insight Limited 12

13 Value gainers and losers over the last six months: Market Capitalisation for selected technology companies = Share price times the number of shares outstanding -$ $ $ $ $ $ $ $2.61 -$3.54 -$3.60 -$3.92 -$4.34 * Facebook secondary market transactions 3 rd March 2010 and 24 August 2010 $6.05 $5.37 $4.40 $2.86 $2.23 $2.16 -$0.09 USD Billion $9.61 $22.20 $54.45 Apple Facebook* Amazon Qualcomm EMC Ericsson Taiwan Semiconductor Oracle Samsung Electronics SAP Dell IBM Yahoo Nintendo Sony Nokia Intel RIM Google Cisco Hewlett Packard Microsoft $33.70 $11.50 $36.95 $32.55 $51.08 $48.22 $23.94 $26.55 $18.51 $22.11 $41.81 $36.44 $35.42 $39.34 $29.99 $34.33 $37.57 $49.18 $24.33 $39.09 $64.97 $55.36 $65.81 $59.76 $55.18 $55.27 $96.64 $94.48 $86.81 $ $ $ $ $ $ $ $ $ $ $ $ $ $ Sept Mar 2010 $ $0 $50 $100 $150 $200 $250 $300 USD Billion 2010 Act On Insight Limited 13

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15 Android has nosed past Apple s ios in the last quarter to grab a 27% share of those recent US smartphone subscribers. Source: Android Soars, but iphone Still Most Desired as Smartphones Grab 25% of U.S. Mobile Market Nielsen Wire 2 August Act On Insight Limited 15

16 2Q 2010: Google s Android passed Apple s ios to become the World's 3rd most popular smartphone OS Worldwide Smartphone Sales to End Users by Operating System in 2Q10 Symbian Research In Motion 11.2m units (18.2% share) Android ios Microsoft Windows Mobile Linux Other OSs Source: Gartner - August m units (17.2% share) 8.7m units (14.2% share) 2Q09 2Q Millions of Units Source: Gartner Says Worldwide Mobile Device Sales Grew 13.8 Percent in Second Quarter of 2010 Gartner 12 August Act On Insight Limited 16

17 Smartphone OS shares in 2014: Symbian 33%, Android 25%, Apple ios 11% Worldwide Converged Mobile Device Operating System Market Shares and Growth Operating System 2010 Market Share 2014 Market Share 2014/2010 Change Symbian 40.1% 32.9% -18.0% BlackBerry OS 17.9% 17.3% -3.5% Android 16.3% 24.6% 51.2% ios 14.7% 10.9% -25.8% Windows Mobile 6.8% 9.8% 43.3% Others 4.2% 4.5% 8.3% Total 100.0% 100.0% Source: IDC Worldwide Quarterly Mobile Phone Tracker, September 7, Act On Insight Limited 17

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20 US research: What do you check first: (58%) Facebook (11%) 2010 Act On Insight Limited 20

21 August 2010: US Web users More hours clocked up on Facebook than Google 41.1 million minutes (9.9% of total) 39.8 million minutes (9.6% of total) Source: 37.7 million minutes (9.1% of total) More hours clocked up on Facebook than Google Stuff.co.nz AP 10 September Act On Insight Limited 21

22 Top U.S. Search Sites for July 2010 Google YOY share steady at 64.2% - Bing jumps up to 13.6% Top U.S. Search Sites for July 2010, Ranked by Share of Search Rank Brand Share of Search MoM change % YoY change % 1 Google Search 64.2% -1% -1% 2 Yahoo! Search 14.3% 4% -17% 3 MSN/Windows Live/Bing Search 13.6% 2% 51% 4 Ask.com Search 2.1% 2% 24% 5 AOL Search 1.9% -3% -38% Source: Top U.S. Search Sites for July 2010 Nielsen Wire 25 August 2010 Source: The Nielsen Company 2010 Act On Insight Limited 22

23 What a difference a year makes New Zealand s top 15 websites (all Websites) for the industry 'All Categories ranked by visits for the week ending 11 September 11 Sept Jun 2009 The data samples featured are from the Hitwise Online Competitive Intelligence Service, which bases its daily insights on the online usage and search behaviour of over 460,000 NZ Internet users Act On Insight Limited 23

24 New York State launches Empire 2.0 Centre of Excellence Website Source: New York State Continues Initiatives to Connect, Create and Collaborate New York State Office for Technology 20 August Act On Insight Limited 24

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26 1. FREE or FREEMIUM Digital electronics have revolutionized free For almost all digital products, the marginal cost of reproduction is zero The future of a radical price Today companies can profit more by giving things away free than they can by charging for them Act On Insight Limited 26

27 1. FREE Abundance thinking is becoming a far more powerful engine for commerce than scarcity thinking SCARCITY ABUNDANCE You have to get permision Rules Anything goes "We know what's best" Social Model "You know what's best" Business model Profit plan Figure it out as we go Top-down Decision Processes Bottom up Command and control Management Out of control Act On Insight Limited 27

28 1. FREE examples A. Direct cross-subsidies 2 $ C. Freemium Producer Get one thing free, then buy another Consumer The producer gives the consumer product 1 for free in the hope this will then entice the consumer to subsequently purchase product 2. An open-source hardware company 1 B. Three-party markets Producer 2 $ Advertising, 1 Sponsors & Paid Media $ Advertiser 3 Consumer The producer provides product 1 free-of-charge to consumers. Advertisers buy advertising 2 to be included in product 1, in the hope they will be able to sell product 3 to the consumer. D. Non-monetary markets Search AdSense 2 $ Producer Only some pay for the full version 1 2 Producer Gift economy give away for non-monetary rewards 1 Consumer Consumer Consumer A free version (product 1) is made available to anyone who wants it in the hope some users will then choose to upgrade to the paid premium version (product 2) which has more features. In some markets, no money changes hands at all. People gift/give things to each other (for various motivations reputation, attention ) without ulterior motives or expectation of future payment whatsoever Act On Insight Limited 28

29 CASE STUDY of FREE: Yellow s highly successful free yellow & white page iphone application is delivering high convenience (value) to consumers & and business customerlisters increased visibility (value) B. Three-party markets 2 $ Advertiser Producer Advertising, Sponsors & Paid Media $ 3 Consumer Yellow s digital growth strategy Yellow s new Digital Media Director Peter Crowe says Yellow is increasingly looking to the online and mobile spaces as part of its digital growth strategy. The way people are consuming media is changing rapidly. We re very much living in a digital world and our aim is to ensure our key asset - our content - is available to people where they want it, when they want it and how they want it. Source: Infonews 6 Oct 2009 Most popular free NZ iphone app According to independent stats, the initial release of Yellow s app has proved extremely popular with New Zealand iphone users. It became New Zealand s most downloaded free app after only 4 days. Latest stats from Pinch Media (as at 9 September) are show 5,600 downloads and 17,991 sessions. Source: Geekzone.co.nz 12 Sept 2009 Yellow" adds White pages to popular iphone app 6th October 2009 Features of the new release include: Free to download Search both business and residential listings Set your own search radius when finding a business as refined or broad as you want Maps with normal and satellite view Simple click to call Driving and walking directions Choose the number of business search results per page Save your favourite business searches - and see the most popular ones Save businesses and friends / family to your iphone contacts Share listings via The Yellow iphone app provides location awareness, mapping & directions via the iphone s built-in GPS and courtesy of Google Maps Source: Yellow adds White pages to popular iphone app InfoNews 6 Oct Act On Insight Limited

30 2. The Fidelity vs. Convenience trade-off Why some things catch on, and others don't Act On Insight Limited 30

31 $54.45 Apple $22.20 Facebook* $9.61 Amazon $6.05 Qualcomm $5.37 EMC $4.40 Ericsson $2.86 Taiwan Semiconductor $2.23 Oracle $2.16 Samsung Electronics -$0.09 SAP -$2.61 Dell -$3.54 IBM -$3.60 Yahoo -$3.92 Nintendo -$4.34 Sony -$11.61 Nokia -$11.96 Intel -$14.76 RIM -$15.68 Google -$19.92 Cisco -$34.52 Hewlett Packard -$37.23 Microsoft * Facebook secondary market transactions 3 rd March 2010 and 24 August 2010 USD Billion $33.70 $11.50 $64.97 $55.36 $65.81 $59.76 $41.81 $36.44 $36.95 $32.55 $51.08 $48.22 $ $ $96.64 $94.48 $55.18 $55.27 $23.94 $26.55 $18.51 $22.11 $35.42 $39.34 $29.99 $34.33 $37.57 $49.18 $ $ $ $ Sept Mar 2010 $ $ $24.33 $39.09 $ $ $ $ $86.81 $ $ $ $0 $50 $100 $150 $200 $250 $300 USD Billion 2010 Act On Insight Limited 31

32 Act On Insight (BETA) future state catalysts Scanning the emerging future Strategy transformation Facilitation 2010 Act On Insight Limited 32