Mobile Apps: The Big Picture

Chetan Sharma Consulting 9 yr old Seattle based Strategy firm exclusively focused on Mobile Advisor to major operators, brands, startups, VCs, and Fortune 500 firms around the world. Strategy for each of the top 6 global mobile data operators Have a unique 360 o view of the ecosystem Market Research Research and Forecasting Competitive Analysis Market Sizing Strategy Consumer & Enterprise Roadmap Product and Technology Strategy Technical Due-Diligence R&D Business Plan Development Revenue Models 2 Intellectual Property Strategy, Audit, & Policy Alcatel Lucent Disney Motorola KTF Comcast Infospace Startups Others Patents, Infringement analysis Patent Mining and Valuation Litigation Consulting & Testifying Expert Qualcomm vs. Broadcom (ITC) Sony Ericsson vs. Samsung (ITC) Upaid vs. Satyam Computers FedEx vs. Katz AT&T Mobility Sprint Nextel vs. Verizon Wireless Everypath and E*Trade vs. Ajaxo Others

MOBILE ECOSYSTEM TRENDS 5

Mobile Ecosystem is getting Complex Fixed broadband network operator Mobile Operators Movie creation & distribution Fixed video network operator Home networking & automation TV creation & distribution Consumers Music creation & distribution mpayments Mobile device creation & distribution Print creation & distribution Other CE creation & distribution Search Social Networking Games Software & applications Source: Adapted from T-Mobile USA, Inc. 6 Chetan Sharma Consulting, All Rights Reserved Oct 5, 2010

Voice Revenues have Plateaued Voice Revenues in Japan have been declining for years, it started in the US last year Implications more focus on data for marketing, products, churn management, etc. 7

Data Revenues > Voice Revenues Data surpassed Voice revenues at Softbank Last quarter, DoCoMo next quarter, US late 2012/early 2013 8

DATA IS LEADING THE CHARGE/CHANGE 9

Global Mobile Technology Evolution First time, data is leading the charge 10

Mobile Revenue Distribution 11

Data Revenue Distribution 12

Global Trends: Mobile Revenues 13

MOBILE APPS MARKET BY THE NUMBERS 14

Growth in Mobile Appstores The # of appstores have tripled in a year Source: Wipconnector 15

Apps moving beyond the phones BMW Appstore 16

Growth is fueled by smartphones and adoption of data services 17

Global Mobile Apps Market 18

Global Mobile Apps Market 19

Mobile Apps: Revenue by channel 20

Apps vs. Web: The Futile Debate Developers care about two things: Reach potential of reaching most number of paid (onetime, subscription, inapp) or clickhappy subscribers Cost cheapest way to reach these subscribers Adoption Drivers Penetration of HTML5+ browsers on mobile Difference between the native OS support and browser access to the same APIs Implementation differences between various browsers 21

Smartphone Usage: Apps vs. Browser Smartphones are generally using 3G+ Source: Comscore MobiLens, Oct 2010 23

Games dominate apps usage 24 Source: Distimo, Q3 2010, Top 100 apps

So Games are hard to build in the browser today Games are always at the cutting edge of the user experience However, apps that don t require access to all available native APIs can easily be rendered in HTML5+ and they will Broadband network availability/reliability is not completely there yet 25

However, one thing is for sure 26

Impact on Carriers Carriers starting to get cut of the Apps economy Offdeck revenues > Ondeck revenues in 2010 Create competing appstores Figure out mobile advertising strategy Look at multi-device, three-screen strategies Collaborate to Compete Find new ways to monetize app traffic Stay content with bit revenue 27

CONTEXT DRIVEN ECONOMY 28

Analytics framework Predictive Analytics Embedded Predictive Analytics & Optimization Competitive Advantage, Impact on Revenues Static, Batch Reporting Ad-Hoc Reporting Drill Down Customized Alerts Statistical Analysis ANALYTICS Source: Mobile Advertising, John Wiley, 2008 Intelligence from Data, Effort 29

Shift from Icon-Centric Navigation 30

MOBILE APP ECOSYSTEM: WHAT MATTERS 31

Start w/ Rev Share NTT DoCoMo Most Appstores 1999 91/9 10/90 2002 91/9 20/80 2005 91/9 50/50 2009 91/9 70/30-90/10 2011-12 91/9 100/0? 32

Mobile Appstore Ecosystem # of APPS LOWEST Acquisitions Tool Providers Admob Flurry Millennial Media SUN % of PROFITS HIGHEST Content & IP Digital Choclate HIGHER Amazon Real Paypal Microsoft Google Glu Mobile LOWER Direct TV TiVO Facebook The Weather Channel NY Times Operators OEMS RIM Sprint Motorola T-Mobile Samsung LG Nokia ATT Verizon Apple LOWEST or NEGLIGIBLE HIGHEST Orange China Mobile Microsoft Google 33 Chetan Sharma Consulting, All Rights Reserved Oct 5, 2010

Sustaining the Open Developer Ecosystem Rovio Tapulous ngmoco 34

It is not about the OS/Appstore, It is about the Ecosystem ifund, Connection with Investors (50% of the companies now with > $10M in rev) itunes, Carrier Billing Location, Presence User Profile, Context Reports, Analytics $0 Signup, $0 Certification Better Search and Discovery, Social Interaction, Virality Better bandwidth management Caching and Optimization Time to approval/market Flexible payment/billing models Better networks, devices Greater Rev Share Reduced Fragmentation More Open APIs Marketing Dollars 35

Thank You chetan@chetansharma.c om twitter.com/chetansharma 36