Mobile Sands

May 15, 2009

On MIT NextLab and Mobile Ventures for the Next Billion Consumers

Filed under: Mobile Apps, Netbooks, New business models, Smartphones — AJ @ 7:16 pm

Yesterday, I attended the “finals” of MIT NextLab, a social entrepreneurship class that aims to “launch mobile ventures for the next billion consumers”. It was heart-warming to see how ubiquitous connectivity (via SMS) and low-cost mobile computing devices (smart phones) can be used to make a huge difference in the lives of poor people in developing countries. Still, the premise that somehow these socially beneficial projects could be turned into self-sustaining ventures without expanding the addressable market seemed a stretch.

MIT NextLab and the Next Billion Network Project

The NextLab course is offered as part of the Next Billion Network (NBN) initiative at MIT Media Lab. NBN’s goal is to encourage grass-roots level development using cell phones in developing countries. The program was founded by Telmex’s Jhonaton Rotberg little over two years ago. Telmex, its mobile arm America Movil, Nokia and Bank of America are the primary sponsors of the activity.

 Like most good entrepreneurial ventures (or successful IT projects), NextLab projects start with the end-customer. Each student team is paired with a NGO, corporation or some other representative group in a developing country who has a problem that needs to be solved. Projects are typically designed for a 1-year team period, encompassing two semesters, and MIT’s winter and summer breaks. At least one project started in this class (MoCa) has continued for almost two years, while few others have been taken over by local partners or are stand-alone ventures.

 Videos of this year’s projects are worth checking out. These projects address problems like making healthcare accessible in remote rural areas (MoCa), enabling people without bank accounts to do basic financial transactions (Dinube), making the life of truckers in Colombia easier (Hammock),  creating an even-playing field for small farmers in Mexico (Zaca), fighting crime in large cities via crowdsourcing (Civirep), and spreading adult literacy in India (CelEdu).

 Freemium Model for Social Enterprises?

 Most student teams claimed that they could somehow create a business by selling to the customers they are currently working with.  Though laudable, in my opinion,  it is very difficult to build businesses that cater ONLY to people who have very little or no money. Proponents of creating such businesses argue that they can make up for low gross margin per customer through scale. Alternatively, social ventures try to sell to governments or well-financed NGOs.  However, but for a few exceptions like Bangladesh’s Grameen Bank, success stories are tough to find.  

Take the One-Laptop-Per-Child (OLPC) initiative as an example (also, see Wikipedia link). OLPC was launched in January 2005 at the World Economic Forum with a singular focus of bringing a $100 laptop to the poorest children in the world and with a business model of selling these machines to governments and NGOs. It was not until late 2007, when the original business plan was not working out, that OLPC (half-heartedly) decided to sell its machines in the US via its “give-one-get-one” program. By then it was too late. OLPC’s XO was never designed with US consumers in mind and most consumers who got one were disappointed. By mid-2008, netbooks stormed the market and there were few takers for XO. But this does not mean that model of leveraging technology developed for the poorest to meet needs in more affluent markets is flawed.

One way to create viable ventures would be to gain scale by selling to poor customers in developing markets but earn profits by catering to more affluent customers in developing and developed markets. Such a business model would be similar to the freemium (free + premium) model used by many Web2.0 companies.

One company that is following such a model is AssuredLabor. This company started as NextLab project in the fall of 2007 with a local partner in Brazil, and that is where they built their prototype. In mid-2008, the team decided to turn the project into a stand-alone venture, with Boston as their first pilot market in the US.  Technology commercialized and developed here could be applied back in Brazil as well as other developing countries.

Many current NextLab projects hold similar potential. Hammock’s SMS-based logistics management system may be useful for small delivery companies in developed markets. CelEdu’s mobile games could be used to teach foreign languages. MoCa could play a role in connecting clinics in rural America to hospitals in larger cities. And, at the same time, these ventures could keep on providing technology to their NGO partners in the developing world at affordable prices.

February 8, 2009

Will Apple Allow Amazon to Sell eBooks on iPhone?

Filed under: App Store, eBooks, iPhone, Netbooks, Smartphones — AJ @ 2:17 pm

Amazon recently announced that it would offer eBooks on mobile phones, in addition to offering them through its eBook hardware, Kindle.  Though, this should put a damper on discussion about “Kindle killers” , will people who flocked to the Kindle substitute it for its software version? More importantly, will Apple allow Amazon to bypass its App Store using “1-click shopping”?

 The “Amazing Kindle”

 Amazon’s Kindle device is absolutely delightful.  It solves practically all the problems that have plagued eBook readers in the past.  

  • Lighter than a paper book with a nice, rubberized grip on the back
  • Convenient page turning buttons mean that you can read with one hand (and hold your coffee mug in another)
  • No-glare screen, thanks to the guys at eInk
  • Wireless, 1-click purchase, over Sprint’s EV-DO network that Amazon calls Whispernet. No need to download books to a PC, and then sync.
  • A huge collection of books including recent bestsellers (Read Outliers – cover to cover – in 4 hours)
  • A battery that seems to last forever (if wireless modem is turned off)

 eBook Readers on iPhone

 Books have become a prominent category on iPhone, prominent enough that Apple recently released an advertisement on reading.  Though reading on the iPhone is not as enjoyable as reading on the Kindle, it is still very nice.  The big draw for me (and for many others) is the off-copyright, free content that is available through iPhone book readers.

 Two eBook distribution models have appeared on iPhone so far:

1. eBooks as Apps: Publishers convert books into Apps that get distributed through the iTunes store.  Several publishers including O’Reilly, Penguin, Sterling and Lonely Planet are trying this route. Startups like Scrollmotion have emerged to help established publishers.  And lots of small companies like CoolGorrilla are creating fresh books around travel and language learning.

2. eBook readers that allow you to purchase books:  One such reader, Stanza, for instance allows a user to buy books from sellers like Fictionwise and Smashwords, as well as download free books from Feedbooks.  Fictionwise offers its own reader as well, called eReader. Shortcovers, a division of Canada’s Indigo book sellers, wants to go down the same route. Though their reader has been getting rave reviews, but is somehow unable to make it through Apple’s approval process.

Will Apple let Amazon sell eBooks through an iPhone App?

Apple would clearly prefer the “eBooks as App” model.  That is where Apple makes money. As evidence, consider the fact that even though Stanza and eReader are the #1 and #3 most popular free apps in the book section of the App Store, they are not mentioned in Apple’s ad on reading.  And Shortcovers has been mysteriously stuck in Apple’s app approval process. 

I would be surprised if Apple approves an Amazon app that lets users make “1-click” purchases. If eBooks ever become a multi-billion dollar market,  Apple would be handing over hundreds of millions of dollars to Amazon (a rival in the music business).  Apple may also have the tacit support of publishers in preventing Amazon from dominating the eBook market.  While Apple takes 30% of an app’s selling price as a distribution fee and lets publishers set the selling price, Amazon has a heavy influence on setting the book’s price and is rumored to take 3565%.

Amazon, of course, understands this and that is why its spokesperson did not name the devices on which its reader will run.  If Apple approves Shortcovers,  it will open the door for Amazon. Otherwise, it is going to be Android or Windows for Kindle’s reader software…

 

 

 

 

 

 

 

January 28, 2009

The future of games looks bright

Filed under: App Store, games, iPhone, Netbooks, New business models, Smartphones — AJ @ 5:56 am

Yesterday evening, I attended a talk by Professor Chris Swain about the future of games.  

The main focus of Chris’ talk was creativity in the game development business.  One of the things that he talked about was how Apple’s App Store (and similar marketplaces from Microsoft for Xbox or future ones for Android and Symbian) can unlock creativity in the gaming business.  In contrast to the normal complaints about how Apple’s 30% cut is too much, Chris said that “70:30 is the best publishing deal ever” for game developers.  He did complain about how the Apple’s shopping interface (top 10, top 50, others) favors cheap $0.99 games over more expensive development efforts.

He said that, in contrast, publishers of console games make only 17% on AAA titles.  Since developing games for major gaming platforms can cost close to $20M, it means that a game publisher must have line of sight to selling over 1 million games. This pushes publishers to develop proven, formulaic titles, hampering creativity.  Digital distribution where publishers can get a higher cut can change that, enabling smaller team to innovate. And even for formulaic games, if the digital medium of distributing games is successful, lot of publishers would prefer to sell online rather than through Wal-mart (the biggest channel for game titles today). 

Games on popular consoles cost so much (and publishers get so little)  because companies that build the hardware (Sony, Microsoft, Ninetendo) need to collect a tax to recover the money they lose on the console.   If interesting enough games could be created on powerful low-cost platforms that come with multi-touch interfaces (smartphones, mobile internet devices, netbooks etc.) and can be digitally distributed, the whole business model could change. I am sure this keeps lot of people awake at night – some worried about losing their existing business, others abuzz with the opportunity.

Here are two more interesting (and perhaps relevant) recent news items:

1.  More powerful, multi-touch, touch screens on their way. See story about Cypress and Palm.

2. ABI predicts 139 million netbooks by 2013.  Maybe a little optimistic, but definitely the expected direction.

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