Mobile Sands

June 6, 2009

Smartphones may Herald the Golden Age of Internet Radio

Though Internet Radio has been around since the mid-nineties, it has not seriously challenged good-old FM radio (“Network radio”) in the same way that Internet video (YouTube, hulu and others) have challenged Network/Cable TV.  The reason – over 60% of radio listening is done “on-the-go”. And of the 40% of radio listening that is done at home, most is done while doing other things around the house – not when the listener is on her PC.  Well,  3G-capable smartphones change all this.  

Pandora, NPR, Y!Music and more

Pandora, the web-based service that let users create their own radio station, is the #1 free music application on Apple’s App Store, and is ranked #20 among all free apps.  Other personalized streaming audio apps on the iPhone include Slacker and CBS-owned Last.Fm.

Interestingly, network radio has been quick to enter the smartphone radio market.  NPR makes 300 of its stations available through the Public Radio Tuner app, ranked #5 among all free music apps.  Clear Channel, the largest owner of FM radio stations in the US makes some of its channels available through iHeartRadio.  Many CBS stations can be heard via AOLRadio.  Yahoo! Music launched an iPhone version of their service few months ago, and one can listen to thousands of radio stations from around the world using apps like Radio, ooTunesRadio, allRadio and WunderRadio.  

Many Internet Radio apps are quickly making their way to other smartphone platforms as well.  Slacker offers a Blackberry App. Pandora has been available on Blackberry, Windows and over 50 feature phones for a while but it recently made a  conscious choice to focus on Palm Pre as its second major smartphone platform. As a result, Pandora comes pre-installed on the Pre.  Mumbai-based Geodesic is focusing on Blackberry and Symbian phones instead with its Mundu Radio application.

Unlike mobile video, carriers are not blocking Internet radio

Wireless carriers are not blocking Internet radio applications because its bandwidth requirements are in line with 3G.  Internet radio stations use streaming rates between from 28.8 kbps to 128 kbps, speeds that can be easily supported even over moderately loaded 3G networks.   Someone who commutes for 2 hours/day for 22 days a month and listens to Pandora at 128 kbps would download around 250 MB of data – not a very large amount, and definitely within the data caps imposed by most 3G providers.  

Time for 3G carriers to challenge Satellite Radio

The main value proposition of satellite radio has been that one can listen to hundreds of radio stations, without the hassle of searching for the right one when crossing over from one metro area to another. Well, now a listener can do exactly that and much more with Internet radio on her mobile phone. She can listen to thousands of radio stations from around the globe or even better, listen to a station completely personalized to her tastes.  And do all this without paying anything over and above the price of the a 3G data plan.  

Though 3G carriers are not actively promoting Internet radioon phones  and challenging satellite radio, they should, and make a play for the dollars that are going to Sirius/XM today.  Sirius/XM charges $9.99 – 19.99 for its multiple radio station services and had 18.6M subscribers at the end of Q1’2009.  If these 18.6M subscribers were convinced that they could get the same selection of radio stations (or even better – personalized radio stations!) on their 3G phones – in addition to email, web and more – it would be easy for them to sign up for a $30/month plan.

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May 27, 2009

Nokia’s Ovi Store – A Very Strange Launch

Filed under: App Store, Ovi — Tags: , — AJ @ 3:51 am

Nokia launched its Ovi store on May 26th 2009, but it do so in a very strange way.  

Despite setting expectations three weeks ago that the Ovi store would have over 20,000 ” items” (i.e applications + multimedia content), Nokia launched the store with little over 1,000 “items”.  Where did the other 19,000 “items” disappear?  Further, rather than launching the store with an enthusiastic endorsement from a major non-US operator, an area where Nokia has consistently claimed strength, Nokia decided to do a press release with AT&T; a press release in which AT&T Mobility”s CMO says that the carrier will offer the Ovi store to consumers in late 2009 because, “AT&T has a reputation for providing the most customer choice.”  

I browsed through store.ovi.com to see what is available there.  Once I selected my phone as “Any Phone”, 1365 items showed up.  Of these items, only 619 (45%) are applications, while the rest are MP3, videos, ringtones and wallpapers.  And as many other bloggers have pointed out all day, applications like facebook are missing. In fact, it is very likely that Palm Pre will have more marquee applications than the Ovi store will when it is launched on June 6th.  And Pre will definitely not be missing out on facebook.  Maybe someday we will know why Nokia felt compelled to rush out with this launch.

April 28, 2009

Amazon Gets eBook Store on iPhone by Acquiring Stanza

Filed under: App Store, eBooks, iPhone — Tags: , , , , — AJ @ 3:10 pm

One of the key features missing in Amazon’s Kindle iPhone app is the ability to browse and purchase eBooks.  A customer must purchase eBooks through Amazon’s website and add them to her account, before she  reads them using the Kindle iPhone reader.  As I have speculated in earlier posts, this feature is missing because Apple does not want anyone, especially Amazon, to create an alternative to its App Store on the iPhone.  However, one eBook seller that had slipped through iPhone’s app approval process was Lexcyle/Stanza – back in the days when Steve Jobs was saying that “people don’t read anymore”.  Yesterday, Amazon acquired Stanza and may have fixed that gap in its offering.

Back in January (before Kindle’s iPhone app was released), I spent some time comparing Stanza and Fictionwise’s’ eReader. While (in my opinion) eReader offered a better reading experience, Stanza offered a better way to browse and acquire books.  Stanza has tie-ups with several book sources (Fictionwise, feedbooks, Smashwords etc.) and provides book reviews from GoodReads. Unlike eReader, customers could browse through all these book catalogs without logging in, and it was easy to purchase books.  

Stanza grew quickly and was downloaded over 1.5 million times. However, things started changing after Amazon released the Kindle App in early March.  Another established bookseller, Indigo, released its Shortcovers app. And, at the same time, Stanza’s main book seller partner, Fictionwise got acquired by Barnes and Noble.  Plus, several publishers are now selling books as stand-alone apps on iPhone. With larger booksellers in the game, Stanza probably became untenable as a stand-alone business, and agreed to Amazon’s embrace. Amazon now gets the Stanza store, and we wil see how the Stanza store changes in coming months.

March 28, 2009

Open Access Makes Networks Valuable Platforms – Not Dumb Pipes

Filed under: Android, App Store, iPhone, LTE, Mobile Apps, New business models — Tags: — AJ @ 2:13 am

“Open” is in the air 

Recently AT&T chief Ralph de la Vega talked about open development platforms with FierceWireless. In his view, handset platforms are not open if they use proprietary APIs to access handset capabilities and he stressed the need for open APIs within handsets. A friend at Verizon reminded me earlier this week about Verizon’s Open Development Initiative (ODI) which allows third-parties to get hardware certified to work on Verizon’s network and Verizon’s upcoming 4G innovation lab

Among handset vendors, Nokia wants to open-source Symbian and Google is already doing so.  Google’s Android, in particular, is widely regarded as open. In contrast, many industry commentators, including FierceWireless editor Sue Marek, call iPhone and Blackberry closed because Apple and RIM will not license their OS to other handset vendors.

 Defining “open”

 If we are willing to accept the Internet as the gold standard of openness, the more a system resembles the internet, the more open it is. Therefore an open system is one that

  1. Anyone can access on equal terms
  2. Anyone can build content and applications on equal terms
  3. Anyone can distribute their content and applications on equal terms

Based on this definition, Apple’s iPhone provides a remarkably open platform for application developers and consumers, even while Apple keeps its OS closed to other hardware manufacturers. In a sense, iPhones are a similar to Sun Servers that power large parts of the Internet – a proprietary hardware/software combination that is available on equal terms to users and developers.

 “Open” does not mean “free”

Since the terms “open source” and “free software” have been used interchangeably, it has created the impression that free means open. This is not true in general. For example, free broadcast TV is actually a closed system.

On the other hand, two of the most valuable “open systems” we all use – the electricity grid and the phone system – are not free. However, they are open because everyone can access them on equal terms. Anyone can create applications and end-points for them (cordless phones, answering machines, refrigerators) and can distribute these applications. Technical standards that require patent holders to contribute IPR under a FRAND regime are open in the same way.

 The “dumb pipe” misnomer

Whoever came up with the term “dumb pipe” did a tremendous disservice to the mobile industry. Imagine how people at facebook would have feel if they were dubbed  “that dumb online directory” for offering open access to application developers. Instead facebook have been celebrated as a “platform”. In the same vein, the right way to describe a network that provides open access on equal terms is not “dumb pipe” but “platform.”

Once network providers start thinking of themselves as platforms, they will see the benefit of allowing huge number of third-parties to create applications on their platform.  Most of these applications will fail, but the applications that succeed will not only make the developers who creat them rich, but will also make the network  incredibly valuable for consumers, and for the investors who own the network.

 

March 20, 2009

With iPhone OS 3.0, Apple Takes Aim at Game Consoles

Filed under: App Store, games, iPhone — Tags: , , , , , — AJ @ 12:44 am

Apple may have single-handedly revived the mobile games market.  Within 8 months of iPhone 3G’s launch, more than 6200 games are available on Apple’s App Store and 74% of them require payment.  And iPhone users are downloading them, voting with their dollars for the games they like.  At the end of January reported that 32.4% of iPhone 3G users download games, compared to 3.8% of all mobile subscribers.  

With iPhone OS 3.0, Apple is going after gaming consoles popular with casual gamers – Nintendo DS (NDS), Playstation Portable (PSP) and Nintendo Wii, by providing:

  • Peer-to-peer gaming over Bluetooth. P2P gaming (over WiFi) is a very popular feature of NDS and PSP. Apple claims that its “Bonjour” application will discover other users who are playing the same game, and customers will not have to do manual Bluetooth pairing
  •  Accessories controlled via iPhone. Accessories are a big part of Wii’s value proposition, enabling products like Wii Fitness and EA Active. Now similar applications can be created for iPhone devices

Further, iPhone OS 3.0 will offer “In-App” purchases. This enables developers to use business models similar to those used for PC games. Developers can

  • Offer subscription based pricing, popular with PC-based MMOGs
  • Start users on free version, then convince them to upgrade to a premium version
  • Sell a wide range of virtual goods

By offering developers 70% of the selling price, Apple has attracted a wide range of developers – small and large. Several experienced independent game developers have hit the jackpot and some small development teams like Smule are turning their hits into venture-funded game studios.   At least two large publishers, EA and Gameloft, are making a significant investment in iPhone games and seeing real revenue.  Gameloft has 20 games available on iPhone and, by early March, had seen 2 million downloads. With In-App purchases, Apple is further sweetening the deal.

Apple’s installed base is still a fraction of NDS, Wii and PSP. According to Nintendo’s Q4’2008 results, they had sold 96 million NDS and 44 million Wii devices worldwide.  Sony PSP has an installed base of 50 million units. In contrast Apple announced on March 17th that it had sold 30 million iPhone 3G and iPod Touch. Probably, just 30% (i.e. 9 million) of these are used for gaming. Still, Apple is growing its base at a rapid clip and I will not be surprised if the number of iPhone 3G and iPod Touch devices crosses 100M by the end of the year – a respectable market share compared to the console biggies.

Update (03/25/09)

March 14, 2009

Windows Mobile Needs a Killer App To Attract Developers

Filed under: Android, App Store, iPhone, Smartphones, Windows Mobile — Tags: , — AJ @ 5:22 am

Earlier this week, Microsoft announced that like Apple, Android and Nokia it will give developers 70 percent of app sales revenue.  However, unlike other platform providers, it will provide  “transparency throughout the certification process, and guidance and support from the stage of development to the final sale to the consumer.”

Microsoft’s differentiation sounds good on paper and I have read analysis which claims that since developer relations is Microsoft’s strengths, leveraging it against the czars of Cupertino is a wise thing.  Even if Microsoft can economically provide cradle-to-adulthood support to hundreds of thousands of developers, will that be enough to attract the best developers to WinMo?

The best development teams are breaking down walls to create fantastic apps. They will build their apps for platforms which consumers buy.  Android is a case in point. Despite all the buzz around it, Android Market has around 1000 apps compared to over 27,000 on the App Store. Unless the G1 moves off-the-shelf as fast as iPhone, majority of developers will not invest in it.

To really get legions of developers on board, Microsoft must find a way to make Windows Mobile devices fly off the shelves. To do so, Microsoft needs to internally develop (or acquire) at least one application that alone provides enough reason to buy and love a WinMo6.5 device – a killer app.  Blackberry’s killer app is Wireless Email and Apple’s killer app is Safari.  What does Windows Mobile have up its sleeve?

To close off, I don’t think is lousy in supporting developers, it is just selective.  Recently, I went for a talk by Jamie Gotch, one of the two developers who created the hit iPhone game, FieldRunners. Jamie talked about how extensively Apple promoted their game once it had received great reviews from users and the press.  And this afternoon I was reading about how Apple has allowed another top gaming app iMafia – a multiplayer online role playing game – to do microtransactions. Bottomline –  if a developer builds an app that consumers love, Apple will bend the straitjacket and provide it great support.  Rest of the developers should just be happy that they get to hang out with the hip crowd.

March 9, 2009

Blackberry App World Looks Well Thought Through

Filed under: Android, App Store, iPhone, Smartphones — Tags: , , , — AJ @ 8:58 pm

Recently, RIM disclosed more information about its planned application store, now called “Blackberry App World”. Information on a FAQ posted on RIM’s website shows that its store addresses several shortcomings of Apple’s store and tries to replicate what worked well for Apple. Here are few things that I liked:

  • Leverages Paypal to reduce purchasing friction – Customers with Paypal accounts will not have to go through the hassle of establishing a new account to download their first app. This is similar to Apple’s strategy of leveraging iTunes accounts to reduce friction on its App Store.  However, it remains to be seen if Blackberry will use free apps on its store to drive Paypal sign-ups,  something Apple does.
  • Sets $2.99 as lowest price to entice developers to invest – Blackberry is pushing for higher quality applications because it is unlikely to beat Apple on the sheer number of applications (Apple claims to have over 25,000). Though there is no guarantee that a $2.99 application will necessarily be better than a $0.99 one, it does provide developers with a business case to invest more.  Blackberry users will not lose out on apps are available for $0.99 on App Store because most such apps have free (“ad-supported”) counterparts that will eventually make their way to Blackberry
  • Allows developers to offer “Try and Buy” – Blackberry allows developers to chose if they want customers to try their application before they buy it. This is a better model than Apple’s, where developers who want to encourage trials have to create and distribute a “Lite” version or Android’s where all apps are “try and buy”by default (since they are returnable in 24 hours)
  •  Offers flexible licensing schemes to attract enterprise software vendors- Blackberry allows software vendors to run their own license distribution servers. This enables software vendors to implement pricing schemes in which they sell a pool of software licenses to large corporations.
  • Is customizable per operator – Gives operators (and developers) control over which apps are distributed in which markets.

Blackberry’s policies combined with the fact that it offers a higher revenue share (80%) than all other application stores should win it developer support. Now, Blackberry needs to do three more things to effectively compete against Apple:

  1. Offer a fantastic shopping and usage experience to buyers
  2. Convince operators and developers that it has momentum
  3. Create awareness about the applications available on its platform

Let us wait and see how it goes.

    March 4, 2009

    Apple allows Amazon to Sell eBooks on iPhone

    Filed under: App Store, eBooks, games, iPhone, Smartphones — Tags: , , , — AJ @ 3:35 pm

    Apple approved Amazon’s Kindle eBook reader app on the iPhone today. A few days ago, it had allowed Indigo Books’ Shortcovers eBook store.  In a previous post, I had speculated that Apple may not do so and try to sell eBooks itself. Not so.  In the last two months, Apple has also allowed several third-party browsers – something many did not expect last year.  

    These deciscions indicate that Apple cares less about selling digital content (books, apps, games, music) and more about dominating the smart phone market; that it regards Nokia, Blackberry, Windows and Android as its competitors competitors – not Amazon.  And that it regards building a profitable app ecosystem as a way to strengthen its position as the leading smart phone supplier.  This seems like a very wise strategy.  

    Now that Apple has opened the door to companies who want to sell different forms of digital content on iPhones, one of these days, we may even see a digital music storefront show up in the App Store! And maybe some startups will try to create niche marketplaces to sell apps on the iPhone.

    I did download the Kindle app on my iPod Touch.  It looks like a rushed job – a land grab rather than a landmark. Right now, it is exactly what Amazon’s spokesperson calls it – a companion to Amazon’s Kindle device.  A user cannot browse or buy books from the app; that can only be done online or via Safari.  Not exactly, “1-click” shopping.  Further, Amazon does not provide any free, off-copyright books. I expect App Store users to rate the Kindle app at 2.5/5.  Still, not great news for startups like Lexcyle. Or for publishers who are troubled about Amazon’s power in the book industry and would prefer open formats like ePub rather than Amazon’s proprietary format.

    February 21, 2009

    Android Market’s Return Policy Will Discourage Developers

    Filed under: Android, App Store, iPhone, New business models, Ovi, Smartphones — AJ @ 5:03 am

    Looks like Android team did not see PinchMedia’s presentation on “iPhone AppStore Secrets” before publishing Android Market Business and Program Policies that allow buyers to return an app within 24 hours of purchase! 

    PinchMedia is a New York based company that provides app developers with an analytics library to monitor usage. 30 million of the over 500 million downloads from Apple’s store had their analytics software. The numbers collected by PinchMedia show that less than 30% of people who paid for an app used it after 24 hours.  This is not surprising considering that the average number of apps downloaded per iPhone exceeds 30. Those who did not use an app 24 hours after buying it effectively got suckered, but considering that most apps are priced around $0.99, looks like many consumers don’t mind doing a paid trial.  And if you are a developer burning the midnight oil, paid trials rock.

    No one gets paid trials in the Android Market (are paid trials evil?).  So once buyers realize that the new fart app (or the advanced tip calculator app) is’nt any more useful than the one they already have, they return it.  This no questions asked return policy will definitely increase the number of paid applications trialed, but is it good for developers?

    I don’t think so. The folks at Google could argue that “no-questions asked” returns leads to happier customers.  But will these happier customers pay more for apps on the Android Market than they do on Apple or Nokia’s stores? Unlikely. With a few exceptions, two apps that do approximately the same thing will be priced at approximately the same price in different app markets.

    If the average retun rate on Android turns ends up being 75%,  a developer will need four times as many downloads on the Android Market than it  gets on the Apple’s store to make the same amount of money.  That may happen someday, but for now, developers are better off creating paid applications for Apple and Nokia’s Ovi (Symbian) stores.  And I hope the folks at RIM do not follow Android’s path while creating the Blackberry Store.

    February 17, 2009

    Dividing the Mobile Apps Pie – Nokia, Apple, Google, RIM and others

    Filed under: App Store, eBooks, Mobile Apps, New business models, Ovi, Smartphones — Tags: , , — AJ @ 3:45 am

    Dividing the Pie – Ovi Style

    Nokia launched it Ovi mobile application store today.  I read the developer agreement posted on Nokia Ovi’s website.  Like Apple:

    • Nokia is offering developers 70% of the selling price, less applicable taxes.  
    • Nokia has the right to review all applications and decide which applications get published
    • Nokia will not distribute applications that compete with Ovi (so don’t expect an Amazon Kindle store here!)

    Nokia allows “Operator Biling”

    However, unlike Apple, Nokia plans to offer operator billing.  This is a huge differentiator for Nokia and clearly one of the things they are uniquely qualified to do. With this option, customers who do not have credit cards or who have do not want to be bothered with entering their credit card information, can still buy applications. This can significantly increase the market size of apps, particularly in the developing world, and on low/mid-end phones.

    However, from a developer’s standpoint – there is one catch in operator billing. With this option,  a developer does not get 70% of the selling price, but 70% of what the operator gives Nokia.  It allows operators to potentially get a very large cut of the mobile app revenue by mandating operator billing as the only acceptable payment method.  

    Nokia and Apple vs. RIM and Google

    In comparison to Nokia (and Apple),  Android and Blackberry offer more attractive terms – to both operators and developers.

    Palm, Samsung, PocketGear and Handango

    The cut taken by Apple, Nokia, RIM and Google pales when compared to the 50% that Palm is asking. Palm uses PocketGear (previously part of Motricity) to run its app stores.  Since Samsung is using PocketGear as well, I expect them to offer the same deal. 

    Of course, the revenue share offered by all the phone vendors is better than the 70% that Handango charges developers who have sales over a million dollars! 

    Microsoft’s Plan?

    Microsoft  has not  disclosed  how the pie will be shared on Windoes Mobile Marketplace. Going by Microsoft’s record, I would expect their revenue share plan to resember Nokia’s or Apple’s rather than Google’s. 

    And of course, we will just have to wait and see what Vodafone and China Mobile have up their sleeves!

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