Andreas Constantinou made the first presentation of Swiss Mobile Basecamp last Wednesday. Andreas is founder and CEO of VisionMobile, a London-based company providing high level market analysis. I’ve tried to catch the essence of his talk and would welcome every complementary learning.
- App are making profit for Apple and Google: No, Apple and Google provide great distribution platforms, which are barely profitable. For instance, Apple operates AppStore with small profits (just a bit up break-even). Apps drive platform’s core business.
- It’s all about smartphones: No, leading ecosystems players battle not just on smartphones, but on 4 screens (computer, smartphone, tablets and TV). Every device is dedicated to a different usecase.
- HTML5 is a platform that can replace native apps: No, it’s a complementary technology. HTML5 has no clear leader now, what would be necessary to bring it further. HTML5 can compete on software foundation (where it has a clear advantage) and on developer ecosystem (equal to proprietary OS), but not on monetization, distribution or retailing.
- Android success is mostly due to its openess: No, it is the most closed developer ressource, as you have to sign a commercial agreement with Google to get access to all majors resources.
- Apple competes with Google and Microsoft: No, they all have a very different core business. Of course, they are all trying to get our money across the whole value chain, but for truly different reasons (Microsoft tries to sell licences in corporate world, Google desires to sell ads).
- Money is the main motivation for developers (selling the app): No, reach is far more important. Each developer ecosystem has to motivate developers on specific motivations, not just on money.
- All you need to attract developers is APIs: Yes, the bar for developer is very high and what developers need is zero barriers. You have to create a positive feedback loop (user pays for the use, not developer).
- Telcos need to find a way to increase ARPU (Average Revenue Per User): No, ARPU has a ceiling, because it deals with common needs only. What we saw in 2011 was the applications were opening mobile to all kind of needs (people do not care to only speed money on mobile applications, they have other problems to solve in their life). Now, time is for mobile applications to solve real-life problems (already happening).
- Voice is the most stable telco business: No, voice is under pressure to unbundle. Voice is the last castle to attack within the mobile empire. Voice is the killer API and telcos (“telecommunications company”) are already late with voice APIs (think for instance on what Twilio). There is strong evidence that demand exist to catch the voice market from telcos.
- What strategy for competing with OTT (“Over the top”) telcos: You need new economic tools to compete in the software era and network effects are stronger than economies of scale. Driving demand for your product will drive more demand for devices and for data consumption, so. Product demand increases as complement prices decrease, which is widely use in internet strategies. Google has its core business: ads, but gives free access to its complements offers (browsers, mobile networks, handsets)… So building up the usage give Google more ways to sell more ads.
- Telcos need to unbundle in order to compete in the software era: No, telcos are all in one business. Motto is “take it all or don’t take it”.
Don’t hesitate to comment if there are some mistakes in my post! You can find the complete presentation here.
Related post: App Store Economics