We’ve released our latest workshop – the Telco Innovation Toolbox which introduces the new economic thinking necessary for successful innovation by telcos. This new strategy workshop is aimed at senior executives and combines executive training with interactive goup sessions and brainstorming. Attendees will understand the impact that the new basis of competition has on telcos and will be able to apply new economic thinking to building successful innovation strategies.

[The PC processor market is very different to the mobile processor market. While the former is dominated by Intel, the mobile market has a whole host of companies participating, and Intel is a minor participant there. To understand why, VisionMobile analyst Stijn Schuermans looks at the requirements for silicon products in each market.] Two silicon markets, two silicon champions In the processor market for PCs, competition is based on performance, i.e. processor speed. In the processor market for mobile devices, companies compete based on design flexibility: the ability to tune the processor to the device’s capabilities. As a result, the two markets are structured differently. This article is based on a Mobile Insider report we published in March  2012 – you can download the report here. To start understanding the silicon market, let’s look at the production process of silicon chips. It is made up of three important stages: The design of the logic, i.e. the functionality of the chip. The design of the electronic circuits, i.e. how the transistors are laid out and connected on the chip. The manufacturing process, with a focus on achieving the highest reliability possible with a given manufacturing technology. In the PC market, Intel combines these three stages in its business model. Intel chips are designed in-house and produced in its own factories. Intel dominates the market for semiconductor products for PCs, laptops and servers with about 80% market share. The company has only one competitor in that space: AMD. On the contrary, in the mobile market, ARM on the other hand focuses on the first stage of the production process. It’s business model is to license out intellectual property – logic building blocks that ‘fabless’ chip makers such as Qualcomm, Mediatek and many others can use to design the circuit itself. The chip is then manufactured by a third party. The market leader in manufacturing is TSMC. Today, as much as 95% of mobile phones contain ARM-based processors. As mobile device sales start to overshadow PC sales, Intel needs to enter the mobile market to survive. As such, Intel needs to start competing on flexibility. As a vertically integrated organization, Intel will struggle to adjust to the horizontal industry structure in mobile, currently championed by the ARM ecosystem. From performance to design flexibility For a long time, performance (measured by the speed of the processor) was the main driver in the PC market. The players that achieved the best performance are the ones that integrated the entire production process, from logic design over circuit design to manufacturing, which was exactly how market leader Intel became dominant. In mobile, raw performance was less of an issue as phones used to be simple devices relative to PCs. Therefore the basis for competition was different for PC and mobile processors. To create a wide range of successful mobile devices across diverse price points, you needed above all design flexibility. With flexibility as the main driver, a modular industry structure emerged. The market was split in three layers: suppliers of intellectual property like ARM, chip designers like Qualcomm and Mediatek, and manufacturing specialists like TSMC. ARM’s ecosystem play The horizontal structure of mobile silicon is possible because the market organized itself around a single architecture: today ARM technology is powering processors in the vast majority of mobile handsets. ARM emerged as the leader because the company managed to build an ecosystem of building block providers (the blocks use ARM bus technology to communicate with each other), chip manufacturers, OEMs, operating system providers, and even software providers. Even though ARM is roughly ten times smaller than Intel in terms of market capitalization, the Cambridge-based company manages to have similarly high margins. Its business model of intellectual property licensing creates a unique configuration of the value chain. The convergence on a single instruction set has created a winner-takes-all market in both Intel’s and ARM’s case, from which both companies derive their competitive power. Flying under Intel’s radar The ecosystem around the ARM architecture in the mobile market has reached critical mass in a protected environment, shielded from the attention of Intel. Its main selling point – performance – has been largely irrelevant in mobile. The silicon giant had an ARM-based family of chips in the past, called XScale. Even though Intel was well aware of the technology, it underestimated the future importance of the mobile market. In a classic move of an incumbent about to be disrupted, Intel made the perfectly rational decision to prioritize the higher-margin Pentium chips in its capacity-limited production lines, foregoing the opportunity to make XScale truly competitive in the market. In the end, Intel gave up on ARM-based chips and sold the XScale line in 2006 to the Marvell Technology Group. Exits from less-profitable segments that are none-the-less critically important for the future are a classic but fatal pattern of companies being disrupted. A disrupted future for Intel As the PC market is stagnating, the future of personal computing is based on mobile technology. Intel will find it extremely difficult to establish its place in the flexibility-driven mobile market, where margins are lower and there is firmly entrenched competition enabled by ARM technology. On top of that, the ARM ecosystem will start sucking customers out of Intel’s own market, as performance of PC and even server processors becomes good enough for end users. A perfect example of this is Microsoft’s decision to make Windows 8 available on ARM-based processors as well as Intel’s x86 architecture. Intel will likely be the manufacturer of choice for high-end PC and server processors for a long time to come, but the company’s overall growth will be curtailed by competitors coming from the mobile ecosystem. With Microsoft breaking the ranks and supporting ARM in Windows 8, Intel’s insistence on pushing x86 architecture in its mobile products makes less and less sense. Some may say that Intel can make better performing chips by tightly integrating its x86 architecture with Intel’s chip manufacturing process. While such integration is a strong advantage in PC market, tight integration between processor architecture and manufacturing process is of much lesser importance in mobile — the market where modularity and flexibility trump performance. Business model over technology Intel’s limited potential for growth in mobile is not due to low power technology, as ARM might have you believe. A focus on power consumption is a necessary but not sufficient condition for making chips in the future – one that Intel will be perfectly capable of achieving. It is rather the company DNA of Intel (the margins required and its vertically integrated structure) that is ill-suited to win in a fundamentally changed competitive space characterized by different basis of competition and an incompatible value-chain. The same scenario plays out in other areas of mobile The same disruption patterns are playing out among OEMs (where Android is the disruptor) and in the telco world today. Telcos and OEMs should heed these lessons and re-invent themselves to compete in a changed reality. Handset OEMs The battle between Intel and its ARM-enabled mobile silicon competitors follows the same classic disruption patterns we currently see in mobile platforms. The arrival of iOS and Android caused a fundamental shift in the value chain. Where before consumers would select a phone based on technical specs and feature set, i.e. “performance”, the advent of app ecosystems has commoditized handsets. All smartphones are now pretty much the same; mostly a big touch screen. Consumers in most cases no longer choose an OEM brand, but an operating system, based on the flexibility (the apps) that this platform promises. Android takes the role of ARM: a freely licensable piece of intellectual property that underpins the majority of mobile devices. Stay tuned for next weeks’ blog post, in which we’ll investigate the shifts in the handset industry in much more detail. Telcos Mobile platforms affected handsets, but also carriers. Like Intel, the power of operators used to be based on performance (of the network, in this case). And like Intel, operators are now threatened in their core by horizontal players who appear from outside the traditional telco value network, with business models that are completely foreign to the telco world, based on strong ecosystems that cater to a wide range of use cases. Since the basis of competition has moved from network performance to flexibility and diversity, telcos need to learn the lessons of disruption and re-invent the telco business: modularize the business by unbundling, or be pushed out by competitors who do. VisionMobile’s Mobile Innovation Economics workshop offers a deeper analysis on how telcos need to “unbundle” to innovate. Also – download the full Mobile Insider report – and let us know what you think! – Stijn (@stijnschuermans) #chipsetvendors #chipsets #ARM #qualcomm #mobileinsider

[Which apps make money – and how? Andreas Pappas takes another look at the results of VisionMobile’s Developer Economics 2012 survey and comes up with interesting new insights on app monetisation: how does app revenue vary by app-category and by country? Is there a correlation between time spent developing an app and they money it makes?] In Developer Economics 2012 we discussed app revenues and how they vary across platforms. We found that overall, around half of all app developers that are interested in making money did not earn a sustaining income, i.e. they were below the “poverty line”, which we drew at $500 per month per app. Of course the real poverty line will vary widely across countries and regions: while $500 per month may not be enough for a San Francisco-based developer, it could be more than enough for a developer based in Bangalore where average living cost is less than a third, according to Numbeo. But what are those factors that determine how much money an app will make? In Developer Economics 2012 we looked into revenue breakdown by platform and revenue model and identified those platforms and revenue models that generate the highest average revenue per app per month. We are now revisiting our analysis to go a bit further and see what other factors matter when it comes to generating revenue. Throughout this analysis we have excluded statistical outliers, in this case the top 5% of revenue earners. Solo developers earn a lot less than those working for clients There are significant differences between developers that work on their own projects and those that work for clients, either as direct employees or contractors. Developers working on their own projects reported average app-month revenues of just 30% of revenues reported by commissioned or employed developers. The caveat here is that developers working for clients may not have visibility of their clients’ app revenues so it may be the case that they reported estimated figures or that they, instead, reported their own revenue, which may be coming as a salary, irrespective of app revenue. Looking into individual client industries and excluding those developers that work just on their own projects, we see a large variance between different industries and sectors. IT services & games have an average app-month revenue around $1,500, less than half of the average app-month revenue generated in banking/finance or real-estate, which is over $5,000. In the games and software/IT industries, revenues are, to a large extent, generated by app sales which is a core business activity. In other verticals, such as banking & real-estate, apps are just complements to the business, so developers’ revenues are not directly tied to app revenues. It is worth highlighting that average revenues are significantly inflated by top revenue earners, i.e. they are not representative of typical revenues. However, they work well for comparisons between different industries. Communication & Social networking apps lead the revenue table We also looked at revenues across different types of apps. Again we removed outliers, i.e. the top 5% in each category. The clear winners here are comms & social networking apps such as Skype or WhatsApp for example, generating – on average – 20% more app-month revenue than the next best category, medical and fitness apps. This can be attributed to the added value that comms and social services provide as the user base increases, i.e. the strong network effects specific to this app category. Utilities, on the other hand, exhibit very weak network effects as their utility is dependent upon user base, which seems to be quite fragmented, i.e. utilities mainly address the long-tail, niche user needs. Spending more time developing apps can be very rewarding Next we looked to see how revenues per app-month are affected by the time it takes to develop an app. More development time could indicate rigorous testing and better app quality so, not surprisingly, the more time developers spend on their apps, the better the revenue potential. Apps that take 7-12 man-months make on average 11 times more money than apps developed in less than 30 man-days. All the above graphs do not take into account platform effects, i.e. they are based on data across all platforms. This means that there may be variations by platform not shown here. For example, looking at development time vs. revenue for iOS and Android, we observe that there are quite a few differences in the relative values. To some extent, the particular distribution could be the result of our statistical sample, but it indicates that there are variations among platforms. In the iOS vs. Android comparison, for example, we observe that once iOS developers overcome the 1-month limit, their revenue increases 6-fold while on Android the increase is about half, just a 3x increase. This may have to do with the revenue potential of each platform, which is clearly higher on iOS. However, if we look at the 1 to 6 man-month period, we observe that there is no increase in iOS revenue but a huge increase for Android. This effect could be related to the fragmentation of the Android API and hardware, requiring more effort and development time in order to reach a larger user base. Revenues vary significantly by country There are significant differences in revenue potential between countries. Developers in the US generate 40% more revenue per app-month than developers in the UK and almost 5 times as much as developers in China. These differences have a lot to do with smartphone penetration per country, but also with regional socio-economic factors, familiarity with smartphones and consumption habits. However, developers based in a given country do not only target that country’s population. For example, 40% of developers in South America see high demand for their apps coming from North America. So there are other factors that come into play here, such as app pricing: developers in countries with lower per capita income may price their apps more competitively than developers in richer countries with higher living costs. Apart from the factors presented here, there are multiple other variables that could affect app revenue, such as target markets, development experience and marketing channels used. We’ll continue digging into these factors and report our latest findings in the next report in the Developer Economics series and through our blog. The next report will be out in late January – so stay tuned! We’d also like to hear your views on this. What do you think really matters when it comes to generating app revenue and what do you think we should look into next time? Andreas (@PappasAndreas) #appeconomy #mobileapplications #mobileapps #revenues

[Did you ever think that your mobile can be your remote control for shopping? It’s getting there. Guest author Zabetta Camilleri reviews how mobile apps are changing Fashion Retailing with brands such as Burberry, Forever21, Shopkick, Shopstyle, SalesGossip, Chanel,Tommy Hilfiger & Clotheshorse leading the way in mobile app innovation.] There’s no doubt ‘Fashion Tech’ has become the latest buzzword in retail. The innovation we’ve seen in the Mobile apps space has already disrupted the age-old industry of fashion retail. Now we are witnessing some important trends that will continue to change the way we shop for fashion online as well as on the high street. Apps entering the fashion industry Mobile App innovations will have a huge impact on retail over the next few years. From launching basic websites that have been rendered to fit most smartphones to developing more sophisticated native apps, designed to leverage each functionality of the specific operating systems – the trend continues. The total number of UK subscribers buying via mobile phone grew by nearly 5 million in the last two quarters – a rise of almost 33% (According to mobileSQUARED). A recent survey conducted by the Luxury Institute confirmed the importance of apps in the luxury world by showing that 80% of wealthy smartphone users had downloaded an app and two-thirds have shopped on their smartphone. The survey even showed that luxury shoppers were most interested in using apps to gain access to discounts, whilst early access to sales was the second highest incentive to shop this way. If the high-end retailers were worried about losing their brand value, the key seems to be to translate the same aura of exclusivity to the digital world by giving mobile customers greater access than the average shopper. Shoppers are using their mobile devices to support the whole customer-shopping journey, from discovery of new products and brands through to purchase. Shoppers can research and explore new product features, compare prices, read reviews, find store locations, take pictures of products, scan barcodes, download digital coupons, actually buy something and then, in the long term, expect the customer support needed to establish a long-term relationship. Whatever it is – there’s an app for it, and shoppers are using them more and more.  In addition, as shoppers become addicted to any kind of fashion sales, they are becoming increasingly responsive to any promotions pushed through their phone. In short, Fashion Tech is helping the consumer become much savvier and more demanding than ever before. Opportunities for developers The window of opportunity is now wide open, developers can still get an early mover advantage if they come up with simple ways they can help retailers add value. We see a few market leaders. High street brands, such as Forever 21 and Jigsaw, through to luxury labels like Chanel are driving this forward with the creation of highly engaging mobile websites and apps. What we’ve seen up until now has been pretty basic but is constantly evolving with features that include locating stores, checking if a product is in stock and QR code scanning to capture product information as well as discounts. Companies such as ASOS and ShopStyle have developed apps that are some of the smartest shopping portals in the digital world, and they are certainly generating sales. Neiman Marcus, another high-end retailer, on the other hand are leveraging simple app technology to enhance your shop experience by through the NM Service; an app that lets customers know which of their favourite sales girls are on the floor. A number of new entrants have also muscled their way into increased effectiveness and have snatched a piece of the pie whilst it’s still hot. For example, New York’s Shopkick has come to epitomize the potential of location-based technology. Its participating stores are outfitted with a microphone that emits a high-pitched tone which the smartphone picks up to automatically give you rewards for simply walking into a store. Shopkick reported 700 million product views in its first year and boasts 2.3 million active users. One size doesn’t fit all One issue that keeps popping up as a major barrier to shopping for clothes and shoes online is the question of size and fit. The fact that sizes are not standard across all brands contributes to a high percentage of returns – an extremely expensive issue for all online retailers. To address this problem Tommy Hilfiger has started using the “augmented reality” concept to launch its own augmented reality fitting room, allowing users to superimpose images of clothing onto themselves using the phone’s camera.  These types of “virtual fitting-rooms” are certainly proving to be a popular phenomenon especially when new technology is implemented to make size and fit recommendations. Clotheshorse uses an algorithm based on questions about the user’s body measurements and previous purchases to recommend the best size possible for the shopper, whilst UPcload is a “virtual tailor” that scans your body via your webcam, then uploads a 3-D template of your body and cross-references it against a database of 100,000 people to make a recommendation for clothing that will fit your size and shape. The Future of Fashion is in Tech One thing is clear: Mobile Retail is here to stay. As technologies improve, it will continue to have a greater impact on the traditional shopping journey. Changes are already starting to show – Take Fancy, for example is a social media site that essentially crowd sources interest in a product and allows merchants to sell them in real-time. It puts demand at the heart of the business model, not supply. It is now up to retailers to stay on top of changing customer behaviour and evolving technologies to increase sales both online and in their brick-and-mortar stores. #fashiontech #mobileapps

Product Manager Stijn Schuermans is presenting at the 5th Tablet & App Summit 2012 in Frankfurt, Germany on Tuesday 30 October. If you want to meet up, get in touch with him here.

[With only one week left till the end of our Developer Economics 2013 survey, Andreas Pappas offers a sneak preview into some preliminary results.] With less than a week to go and over 2,000 developers responding so far, this has been one of our most successful developer surveys to date. It is also our largest project so far, involving the whole team at VisionMobile, 6 sponsors and 26 media and regional partners worldwide. But we don’t want to stop here; we want to push the limits even further and with your help we can achieve this. So, if you’re a developer, take the survey – if not, please help us spread the word far and wide! Developer Economics reports reach over 35,000 industry members and help developers, platform vendors and other players understand trends and challenges in the app economy and make important decisions about platforms, tools, developer outreach activities and strategy. If you haven’t taken the survey yet, now is the chance to have your say and shape the things to come. As a bonus, we’ve got some cool gadgets to give away to a few lucky respondents. Also, all respondents are eligible for a free three-month subscription to Bugsense bug-tracking and crash reporting service. The Developer Economics survey shows some interesting trends so far. We won’t spoil the surprise, so we’re keeping the numbers for later on, after the survey ends and our analysis is completed. What we can reveal though are snippets from a first look into our data: – Advertising services are the most popular developer tools Ad services (including ad networks and mediation engines, e.g. AdMob) are the most popular tools, used by about a third of developers in our survey. The least popular services so far are Cross-Promotion networks and Voice services, the latter remaining a niche, used by less than 10% of all developers. If you’re a developer using these services we’d be really interested to hear from you. – Android developers are picking up their tablets Our results so far indicate a substantial increase in the number of Android developers that target tablets. This is not surprising following the release of the Nexus tablet, but it could be an indicator that Android is finally making inroads into the tablet market. Nevertheless, iOS remains the king of tablets, with an even larger number of iOS developers developing for iPads. – Advertising is now a more popular revenue model than pay-per downloads Last year the most popular revenue model was pay-per-download, used on average by 34% of developers, followed closely by advertising. The situation has now been reversed, with advertising taking the top spot among revenue models, in terms of popularity but not revenue. – And the best platform is … We asked developer to rate platforms they have already used or are planning to use against a set of attributes such as development cost, learning curve, app discoverability etc. When it comes to the best development environment the jury is split with Android and iOS fighting a very close battle. What’s your take on this? – How do developers decide what app to develop? Do developers sit around and wait for inspiration or do they pay for market research? Well, some of them do both. Others ask their users what apps they would like, while some develop me-too apps. But the majority of developers just develop the apps they want to use themselves! That’s all we can say for now but stay tuned for the full results. We’re planning to release really interesting data on: – platform mindshare – revenues by platform – revenue models that work best – most popular developer tools by platform & app category – developer tool ratings and selection criteria – and much, much more! Here’s a list of the tools included in our survey:Ad NetworksAdColony AdMarvel AdMob AdWhirl AirpushApple (iAd) Burstly Fiksu Flurry InMobiInneractive JumpTap Lead Bolt MillenialMedia mOcean MobileMobClix Nexage mopub Smaato warp.lyBack-End as a ServiceACS Applicasa Apstrata Buddy CloudMineCloudyRec Deployd FeedHenry iKnode Kinveykumulos mobDB Parse ScottyApp sencha.ioStackMob Usergrid (Apigee) Trestle (Flurry) QuickBloxBug TrackingAirbreak ApphanceBugSense CrashlyticsCrittercism Hockey AppTestFlight UsermetrixCross-Platform ToolsAdobe AIR Appcelerator AppMobi BrightcoveCorona Marmalade MonoMoSync PhoneGap QtRunRev Sencha UnityCross-Promo NetworksadDash AdDuplex AppCircle (Flurry) Applifier AppFlood (Papaya)Chartboost clashmedia Fiksu G6PayGreatPlay Network Jampp maudau RevMobSponsorPay Tapjoy W3i Wavex (6waves)User AnalyticsApsalar Bango DistimoFlurry Google LocalyticsMobClix mopappTestflight Live (Burstly) UserMetrixVoice ServicesAT&T Deutsche Telecom FonYou GetVocal HarQenHoiio Ifbyphone IOVOX Jaduka MicrosoftOneAPI Sendflow Skype Telefonica TelekuTringMe Tropo Twilio Verizon Vivox If you haven’t completed the survey yet there’s still some time to do so. We’d really like to hear about your developer experience, either via the survey or directly. Also, don’t forget to spread the word! – Andreas You should follow me on Twitter (@pappasandreas) #ios #mobiledeveloper #Android #appdevelopment #Blackberry

Presenting our latest infographic – The Mobile Industry in Numbers – the H1 2012 edition of the 100 Million Club, the watchlist of the top mobile platforms and handset manufacturers. This infographic will give you some insights into the mobile market and help put things into perspective. Here are some of the insights from the infographic: – Smartphone sales penetration continues to accelerate, growing from nearly 30% in Q3 2011 to nearly 40% in Q2 2012 – Nearly 2 out of every 3 smartphones shipped in H1 2012 were Android devices – Despite low device sales, the Windows platform already has over 100K available apps in Windows Marketplace – Although Symbian is obsolete, it still has a sizable installed base – larger than bada and Windows Phone combined – In the handset market, Apple and Samsung account for 63% of revenues and over 98% of the profits, depriving other vendors of oxygen and therefore the ability to invest in handset differentiation and marketing – In the smartphone market, Apple and Samsung claim more than half of total shipments. Nokia is shipping more Symbian handsets than WP handsets and their smartphone share has fallen to 7%, down from 16% in H2 2011 #ios #markettrends #100millionclub #Android #windowsphone #Blackberry #handsetmanufacturers #mobileappmarket

[Telephony is up for a big shake-up, as Internet telephony companies like Skype and voice application platforms like Twilio are challenging century-old assumptions about how people speak with each other remotely. VisionMobile analyst Stijn Schuermans sheds light on this new wave of voice innovation and why telcos need to unbundle voice from their network if they want to be able to compete with their OTT counterparts.] Back in February, we published a blog post Paul Golding, heralding the end of the golden era for telcos due to the increasing competition from OTT voice solutions. At around the same time, we published a Mobile Insider paper, “The Future of Voice”, in which we added to Paul’s “notes from the field”, as he called them, with systematic economic analysis. Voice innovation and the disruption of telcos is indeed as relevant now as it was then. Voice could become as important to ecosystem differentiation as location is. Two classes of voice companies The basic concepts of telephony haven’t changed in 200 years, despite technological advances like software routing, mobile phones and digitization. But now that telecom has entered the Internet age, Skype and Twilio represent two classes of companies that are pushing voice to a big shake-up. Skype remains the leader in Internet Telephony, i.e. voice over public data networks. The well-known VoIP company claims over 200M monthly connected users, which would put it among the top 10 mobile operators worldwide. In 2011, Skype served an estimated 145 billion international minutes, just under a quarter of all international phone traffic.  Roughly half of all Skype-to-Skype minutes cross national borders. Skype was bought in October 2011 by Microsoft for $8.5B to integrate into its enterprise offering. Twilio heads the pack in the Voice Application Platform market, providing software components and cloud-based services for building novel voice applications such as voice messaging, click-to-call, person-to-multiperson, voice search and more. The company generated significant developer attention in 2011, growing its customer base by 400% to 75,000 developers. This put it in the same order of magnitude as platforms like Windows Phone 7 in terms of developer reach. Twilio’s voice API is as popular as the Facebook API in the mashup marketplace programmableweb.com. In 2011, the San Francisco based company expanded to the UK and in December it raised a $17M series C funding round to expand to 20 more countries. At the Appsworld conference last week, Twilio had the brightest and largest stand on the floor. How voice is being disrupted In our view, telephony has overshot customer needs. It can no longer be improved in a way that is meaningful to customers, i.e. they are not willing to pay for improvements. Non-optimized data networks like the Internet are still considered unsuitable for mainstream telephony, but the success of VoIP companies like Skype indicates that performance has become good enough for a growing number of customers. This sets the stage for a classic market disruption. In this environment, the basis of competition will shift from voice quality (sound quality, call drop rate) to flexibility of communication (multitude of use cases beyond telephony). This opens up two opportunities for disruption: low-cost alternatives and creation of new voice markets. Internet telephony is low-end disruption to the telco business model. Less demanding customers accept lower quality (as traditionally understood) for a lower price, often free. The mindshare and market share leader here is Skype. The reconstruction of voice enables new markets. With telephony becoming a commodity, old assumptions about voice such as initiating device (telephone), synchronicity (continuous call versus one-off voice message), termination (phone number), scope (one-to-one versus one-to-many) and calling parties (persons versus machines) will be decomposed and reconstructed into new applications that are no longer recognizable as phone calls. Customers will evaluate applications based on flexibility, i.e. the breadth of use cases available, not on traditional quality metrics. Companies like Twilio target new markets (non-consumption), mostly on voice-second connected devices like tablets or PCs. In addition, voice will become the new “killer API”, targeting primarily developers (B2B) rather than consumers (B2C). Eventually the likes of Twilio will usurp the existing market as well: telephony will become “just another app”. Such innovation will grow voice usage (but not telephony) tremendously beyond its current level. The success of Skype, Twilio and many others is strong evidence that this disruption is taking place now, and not in some theoretical future. Telcos’ best shot: unbundling voice Telcos will struggle to compete. The disruptees are the traditional telephone operators. Their business model is no longer sustainable, for multiple reasons. First, they can’t achieve the cost structure of the modular VOIP over data networks with a proprietary, integrated network. Second, their company DNA (in particular their budget prioritization processes) will not allow them to innovate at the same pace nor in the same direction as the voice API innovators, for fear of cannibalizing their existing business. Twilio on the other hand has an explicit disruptive DNA, is set up for flexibility and openness to external innovation (with a developer-centric platform). Twilio even pushes such innovation explicitly with an investment fund for their developer-customers. Unbundling of voice is inevitable. This post-disruption value system requires that the voice service needs to be unbundled from the network on which it travels, e.g. get your connection from a telco and voice through Skype (with a SkypeIn number). This major industry structure overhaul is inevitable for four reasons. 1. In a world where the basis of competition is flexibility and choice, the modular system of unbundled voice serves customers much better than an integrated telephony network, and therefore will win the market. 2. For telcos to survive in the new situation, they need to break radically with their existing company DNA. This can only be done in spin-offs, which requires unbundling voice from their other operations. Voice innovation cannot survive when embedded in the old telco paradigms. 3.Unbundled voice (made feasible by the use of APIs) unlocks external investments. The money invested in unbundled voice will be much bigger than what telcos can invest on their own, making it impossible for “bundled” telcos to compete. 4. Voice is a social construct. The experience from other social networks like Facebook shows that social connections are not bounded by regional boundaries. In a border-less world, voice innovation must be global and therefore over the top, unbounded by the regional limits of today’s carrier networks. Conclusion As we speak, the voice market is being disrupted in a classic case of Christensen’s Innovator’s Dilemma. The basis of competition is changing, allowing new entrants like Skype and Twilio (flexibility) to win over old-school telcos (quality). Novel voice applications like voice-based appointment reminders and voice search are opening up new markets beyond telephony. This will grow the total pie tremendously. As a result of this disruption, it is inevitable that voice will become unbundled from the networks on which it travels. Those who choose to lock voice within their networks will become challenged. AT&T recently partnered with Twilio to offer the Advanced Communications Suite (ACS), a suite of cloud-based voice and SMS-enabled apps aimed at enterprise customers. Even the oldest and largest of operators have understood that voice innovation is imperative for future success. How about your operator? – Stijn (@stijnschuermans) #telcos #ott #skype #mobileoperators #twilio #mobileinsider

[Did you ever wish that your handset understood you better and you didn’t have to tap, type & scroll to tell it what you want it to do? Well, that moment may not be too far away. VisionMobile Senior Analyst Andreas Pappas discusses the future of ambient intelligence and the way handset evolution has brought us closer to that vision.] “PlaceMe” is not an app; not in the traditional sense. You don’t really interact with it and you don’t tell it what to do. It will sit there quietly, in the background, observing you, learning about your daily routine and keeping a record of everywhere you’ve been. “Highlight” is another app that will sit quietly in the background. It will scan people around you and check their profiles. If it finds interesting people such as someone that you share common friends with it will let you know everything it knows about them. PlaceMe and Highlight belong to a new breed of mobile apps that are better described as ambient sensing services. These services require minimal or no user input; they are constantly aware of your environment by monitoring mobile sensors on your phone and combining it with cloud-based information sources to fill in any missing information and augment your perception of the world. Heavyweights such as Google and Qualcomm are also investing in this type of services: – Google Now is a service currently available on Android Jellybean that uses past history searches to predict and display or read-out information that it thinks will be useful to you, such local weather or flight info. – Gimbal, Qualcomm’s context awareness platform aims to empower context aware applications through an SDK that includes geofencing (location-based selection), interest sensing and image recognition among other features. Alohar Mobile, the makers of PlaceMe also provide an SDK and APIs that developers can use to integrate location and motion-based features into their apps. These services are currently at an early stage. They are designed to maximise ambient context sensing (where you are, where you’re going, what the weather, your mood, health or the traffic conditions are like) and minimise your input so that the services disappear into the background and only interrupt you when they have something interesting to say. Mobile devices at the centre stage Ambient intelligence, has been a hot-topic in academic circles and research labs for almost two decades: smart walls, screens, fridges and homes, sensors and sensor networks have featured excessively in research papers. These devices would understand and automate people’s interaction with their environment. And while some progress has been made, there has been a profound lack of real-world use-cases and commercial traction. One of the reasons behind their failure is that such services and devices were disconnected from the user most of time, i.e. their utility has been confined within a very limited use-case. The one component that was necessary to link all these smart components to the user was missing until recently: the sensor-packed smartphone. The sensor-packed smartphone is a vital and key component of the ambient intelligence environment: a device that is with you most of the time, if not always, and has the capacity to monitor, understand, communicate and react to most of your actions and interactions. The number and quality of sensors on smartphones has been increasing rapidly in recent years (gyros, humidity, temperature) and this trend will certainly continue: in the future we might as well see medical sensors integrated within handsets. However, there are several ingredients necessary to empower an ambient intelligence service, apart from sensors: – Cloud-based data stores: Online data sources that turn sensor readings into information that can be understood by humans. E.g. A Wi-Fi transceiver will only work as a location sensor if the address of the Wi-Fi hotspot is mapped in a cloud database. – Cheap & ubiquitous data: The utility of ambient services increases with always-on, ubiquitous and real-time data connectivity to cloud-based resources. – Cheap cloud processing power and inference engines: These cloud-based components do the number crunching and data processing required to combine sensor input with all sorts of data (environmental, geographic, economic etc.) in order to infer intentions and determine appropriate actions. – Mobile processing power: With Quad-core processors running at 1.5GHz, mobile devices now have comparable capabilities to notebooks and are able to do much of the processing required locally. – Apps: Apps act as the front-end and interface to the user and fulfil and extend the use-cases available. Most of the above elements have only recently reached the performance or price level required to enable mobile-based ambient intelligent services. Context-awareness SDKs such as those provided by Qualcomm and Alohar Mobile empower developers with the tools required to optimise their apps with context information of the user and their environment. By doing so they provide a more streamlined experience and a more intuitive user-app interaction than traditional apps. For example, by knowing the user’s location, daily routine and current traffic information, a personal assistant service will be able to infer and inform the user that it is time to leave work to pick the kids from school and his best option is to take the long route there since traffic there’s a traffic jam on their usual route. And this process should not require any user input. These services will learn the user’s habits and schedule just by monitoring their everyday behaviour. Samsung has integrated some of these concepts in the Galaxy S3: the phone will understand that you want to call someone when you lift the handset to your ear while texting them. It will also keep the screen lit as long as you keep looking at it. These emerging features in both handsets and services signal a trend towards ambient intelligence, which will spark a wave of innovation in this space opening up an even wider range of use-cases. New use-cases are being unlocked Apart from a range of personal assistant services that are only valuable to individuals, the scope for ambient intelligent services is much larger than the personal level. Harvesting and processing sensor data from thousands and millions of users via services such as PlaceMe can reveal social behaviour and environmental data on an unprecedented scale. The opportunities are immense: – Commercial: user shopping patterns such as the route a customer took inside a supermarket and how long they spent in each corridor may be useful information for physical retailers. Smart mobile services must offer direct value to users even if their primary purpose is commercial. Otherwise it will be difficult to achieve user traction and overcome users’ privacy barriers. For example, by knowing an individual’s shopping basket, the shortest route and best deals can be highlighted in large supermarket. – Public safety: traffic patterns in cities and concentration of large masses of people in specific areas can be highlighted by using the collective intelligence enabled by sensor data. Safety alerts can be triggered when a variation from normal patterns is observed. – Planning, forecasting and research: the data sets generated by constant observation of location and environmental variables present a unique resource that planners and researchers can tap into in order to better understand changing social or environmental patterns are respond to these. – Health monitoring: medical sensors integrated into mobile phones can alert individuals or medical professionals of an emergency and recommend a course of action. While such sensors are currently provided as add-ons, it may be possible that some may become integrated into phones in the future. The advent of context aware SDKs together with increasing levels of handset sensor integration is bound to open-up a lot more new use cases that developers will address. Beyond the “freaky line” of privacy As prominent Silicon Valley influencer Robert Scoble puts it, the services described here are way over the “freaky line”, implying a very high level of privacy concerns. Placeme and Highlight are examples of apps/services that cross the freaky line, and go far beyond Facebook in the amount of private data they collect. While PlaceMe currently encrypts this data, most commercial use cases can only be unlocked if users relinquish some control of their personal information. Sam Liang, founder of PlaceMe, suggests that these services will become so pervasive that, once we start using them, people will not want to be without them. If this is true, it will signify a fundamental shift in the way users perceive their privacy: the utility they receive will be large enough to overcome their concerns about the way their data is used. Facebook has led the way here, pushing the “freaky line” to higher levels: it has opened up people’s lives, where they’ve been, who they were with and what they did to a wide social circle. And all this is usually exposed voluntarily by the user. Despite privacy concerns there is no sign that users are abandoning Facebook, indicating that its utility is worth the privacy trade-offs for most users. PlaceMe and Highlight will push this line even further by collecting data automatically and continuously. Naturally, sensitivity to privacy will vary by age: teenagers are already less sensitive to privacy loss already giving away much control of personal data to social networks. People’s attitudes towards privacy have been evolving with more and more users relinquishing control. However, a large number of sensitive users still exist and when using personal data, marketers should start thinking about segmenting consumers by their sensitivity to privacy on top of price sensitivity. Where is the opportunity? In the emerging ambient intelligence world there are several stakeholders and opportunities exist all along the mobile value chain: Device and component manufacturers can benefit from a shorter handset replacement cycle fuelled by integration of more and diverse sensors, particularly ones that open-up new use cases such as medical and environmental sensors. As today’s expensive components become good enough and cheaper (screens, CPUs, memory) it is likely that value will shift from these components to integrated sensors in the near future. Platform providers, cloud services and context-aware API/SDK providers link mobile sensor data to cloud resources and to developers. They will likely act as aggregators and distributors of sensor information and processed data adding significant resale value to the raw sensor data. Operators may be able to capture some value if they manage to leverage their role as communication aggregators: from location data to communication patterns and personal data, operators have access to fine grained user information. Presently, there may be regulatory barriers preventing operators from exploiting such data, but changing user attitudes towards privacy could also push regulators to adopt a lighter-touch approach towards operators. Developers have demonstrated the capacity to innovate by extending and creating new use-cases that leverage the newest hardware or software capabilities. Developers will provide the front-end that brings ambient intelligence to the user, empowered by these capabilities and driving a new growth cycle for the app economy. Let us know your thoughts about the future of ambient intelligence services. – Andreas (@PappasAndreas) #ambientintelligence #apps

Our latest Developer Economics online survey has launched. This time we’re benchmarking the building blocks of the app economy, from analytic tools to voice APIs. Join us in Developer Economics 2013, take our online survey, have your say on your favourite tools and win prizes, including an iPhone 5 and a Samsung Galaxy SIII. The survey will soon be available in Chinese, Russian, German, French, Spanish, Korean. Also, our respondents receive a free, 3-month subscription to a crash reporting tool for their apps, courtesy of our friends at Bugsense! Developer Economics 2013 is sponsored by AT&T, Mozilla, Nokia, BrightCove, BlackBerry and Telefonica.

[As we launch the Developer Economics 2013 online survey, Senior Analyst Andreas Pappas introduces Developer Economics 2013, the fourth in our series of developer research reports. This time we’re benchmarking the building blocks of the app economy, from analytics tools to voice APIs. Join us in Developer Economics 2013, take our online survey and win great prizes.] Back in June 2012 we launched Developer Economics 2012, the third in our series of reports that focused on app ecosystems, developer segmentation, platform economics and global app trade routes. Today we are embarking on the evolution of our developer research: Developer Economics 2013 focuses on the best practices for the tools, services and APIs that developers use to build, market and monetise their apps. Take the survey, have your say on your favourite tools and win prizes, including an iPhone 5 and a Samsung Galaxy SIII. The survey will soon be available in Chinese, Russian, German, French, Spanish, Korean. Developer Economics 2013 is sponsored by AT&T, Mozilla, Nokia, BrightCove, BlackBerry and Telefonica. A service economy develops around app ecosystems The mobile development landscape has undergone a massive transformation since the early days of the iOS and Android platforms. In the early stages developers faced a limited supply of tools and services to assist them with crossing platforms, beautifying the UI, bridging fragmentation, integrating with ad networks or analysing user behaviour. They had to create most of the building blocks from scratch using their own means. As mobile application development continues its growth from 100,000s to millions of apps, the rush for gold has sparked a rush for spades. Across the developer journey, there is now a tool for (almost) every developer need, from app testing to ratings management. The app economy is evolving towards a service economy where developers can pick from a range of tools and services to assist them along the plan – develop – market journey. But best practices are yet far from clear. Third-party developer services, ranging from user analytics, location APIs, bug-tracking tools, app-store optimisation services, and cross-promotion networks are, today, vying for mindshare among developers. Developer Economics 2013 aims to identify the most popular developer services among these and measure their Developer Mindshare. Furthermore we aim to understand the reasons developers choose the services they do and how they rate them across range of key performance indicators (KPIs), such as reliability, availability across platforms and ease of integration within an app. The right tools for building an app business Developer Economics 2013 is benchmarking best practices in a variety of developer tools sectors:Ad NetworksAdColony AdMarvel AdMob AdWhirl AirpushApple (iAd) Burstly Fiksu Flurry InMobiInneractive JumpTap Lead Bolt MillenialMedia mOcean MobileMobClix Nexage mopub Smaato warp.lyBack-End as a ServiceACS Applicasa Apstrata Buddy CloudMineCloudyRec Deployd FeedHenry iKnode Kinveykumulos mobDB Parse ScottyApp sencha.ioStackMob Usergrid (Apigee) Trestle (Flurry) QuickBloxBug TrackingAirbreak ApphanceBugSense CrashlyticsCrittercism Hockey AppTestFlight UsermetrixCross-Platform ToolsAdobe AIR Appcelerator AppMobi BrightcoveCorona Marmalade MonoMoSync PhoneGap QtRunRev Sencha UnityCross-Promo NetworksadDash AdDuplex AppCircle (Flurry) Applifier AppFlood (Papaya)Chartboost clashmedia Fiksu G6PayGreatPlay Network Jampp maudau RevMobSponsorPay Tapjoy W3i Wavex (6waves)User AnalyticsApsalar Bango DistimoFlurry Google LocalyticsMobClix mopappTestflight Live (Burstly) UserMetrixVoice ServicesAT&T Deutsche Telecom FonYou GetVocal HarQenHoiio Ifbyphone IOVOX Jaduka MicrosoftOneAPI Sendflow Skype Telefonica TelekuTringMe Tropo Twilio Verizon Vivox Which tool should you use and which one should you trust? These sectors are becoming increasingly crowded with new entrants while merger & acquisition activity is changing the landscape almost on a monthly basis. The tools and services benchmarked in this survey are becoming the building blocks of modern apps and Developer Economics 2013 aims to establish best practices for the key developer tools sectors across the developer journey. Developers are often at a loss when it comes to selecting the right tool or partner among the hundreds of services available to them. Cost is just one variable in the selection process but quite often, it is not the most crucial. The reliability of a service, the regional reach, key metrics (such as eCPM or fill rates), as well as the flexibility to adapt to the developer’s needs are sometimes more important than cost, particularly when developers invest time, money and resources to integrate a third-party service with their apps. Developer Economics 2013 aims to assist developers with the selection process by benchmarking a number of third-party tools and services across a range of KPIs. We are also helping third-party tool and service providers receive valuable information on how developer rate their services and their key decision criteria when selecting a service. If you’re a tools vendor being benchmarked, now is the time to spread the word to your developers. If you are a developer your input into this research is very valuable to us and we’d like to invite you to take the survey. Feedback welcome, as always – Andreas #developereconomics #ios #developers #Android #Blackberry #html

VisionMobile’s Business Partner, George Voulgaris will be sitting on a panel about Cross-Platform Innovation at the Smart Cities Summit in London taking place 25-26 September 2012. If you’d like to meetup, get in touch.

[Is Amazon’s Silk an elaborate attempt at avoiding privacy concerns? VisionMobile Product Manager, Stijn Schuermans, examines Amazon’s strategy and argues the reasoning behind a Kindle smartphone and the likely plans for licensing Silk] The second in a series of articles where we expose the innovation frameworks behind Mobile Innovation Economics, this issue highlights the trend of of the Kindelization of tablets: specifically, Amazon’s Silk browser. As in our previous article, we believe that our analysis still holds true almost a year after its original release in December 2011. The Kindle Fire and Silk are important developments that hint to the future of online retailing. The Kindle introduces new techniques to drive foot traffic into Amazon’s retail properties by subsidizing devices, rather than paying for search advertising. In turn, Silk is used to generate deep customer insight and expand shelf space. We expect Amazon to extend the Silk shelf space by licensing this browser to other tablet and smartphone makers, turning handset makers into Amazon Associates. You can also download the full, 5-page report in pdf format here. The Story On November 15th, Amazon launched the Kindle Fire tablet. As we showed in our “Kindelization of Tablets” Mobile Insider part 1, the Kindle Fire is device optimized for a specific use case – media consumption – and designed to drive foot traffic to Amazon’s core retail business. Amazon is much more than a bookseller. In Q3 2011, it derived only 40% of revenues from “media,” which includes books, music, movies, games, software, and digital downloads. Meanwhile, it derived more than half its revenue from “general merchandise“, in more than 10 categories ranging from electronics to groceries and garden tools. Amazon is a fully diversified online retailer. Amazon’s website generates the bulk of its sales. To drive traffic there, it spent over $1 billion in advertising during the first three quarters of 2011. Of that figure, it spent nearly $120 million, or about 11%, on search advertising with Google in the US alone. The Kindle Fire uses Amazon’s Silk browser, with so-called “split browser technology”. As explained by the company at that time, Silk browser software resides both on the device and on the massive server fleet that comprises the Amazon cloud. With each page request, the Amazon cloud processes, caches and optimizes pages for viewing on a smaller, mobile screen. This technique is claimed to shorten the load time of the website and to reduce bandwidth usage. The split browser concept is not new. It is also used by RIM in its BlackBerry browser, in the Opera Mini browser and by Nokia in its Asha range. Has Amazon entered the browser wars? Glad you asked! Intelligence about user behaviour is what drives Amazon’s core business. Routing the Silk browser’s traffic through its own servers allows Amazon to collect click streams — and not just when the user is shopping on Amazon. Such streams are a source of extremely valuable data — theoretically including the prices others charge for products the user is interested in! Deeper customer intelligence allows Amazon to target customers more effectively, maximize margins, and improve customer conversion (and thus increase sales). We now know that Amazon is indeed actively using data from this platform. User intelligence from the Silk browser is used to deliver a new feature (launched September 2012): “Trending Now” webpages, as Techcrunch reports. We also believe that the browser can become part of Amazon’s retail shelf space. Amazon could use Silk to deliver targeted Amazon ads within the browser UI, potentially saving hundreds of millions of dollars in search advertising expenditures. Silk leverages Amazon’s core technological strength: its cloud computing platform. At the same time this new cloud application pushes the company forward on the technological learning curve. This is similar to Amazon’s earlier move to productize their cloud infrastructure as the Amazon Web Services (AWS). Avoiding privacy concerns From a user perspective, the split-browser technology’s value is perceived rather than real. The Kindle Fire’s processor is good enough to render webpages just fine by itself. Furthermore, bandwidth usage is not an issue on a WiFi-only device. Were Amazon to offer 3G or 4G in the future, well… there are already options, like the freely downloadable Opera Mini, for users who really could benefit from split browser technology. Taken all together, it’s hard for the cynics among us to avoid seeing Silk as a slick way for Amazon to slide up a little closer behind unsuspecting consumers. By spinning Silk as a user experience feature, Amazon may simply wish to avoid privacy concerns — which can be significant where user data mining is concerned, as the recent Carrier IQ debacle showed. A new, asymmetric business model. We believe that a new business model is emerging where telecom products and services are used as a complement to retail. By driving the price of telecom products down using subsidies, demand for retail traffic will be stimulated. Commoditizing telecom products will put the traditional telecom players in a losing situation. Let’s see an example. Amazon is likely preparing for the next step: a subsidized, Amazon-branded smartphone. Split browser technology may not be too relevant for tablets, but it is important for mobile phones. In that context, Silk would be a significant asset, as operators embrace browsers that save traffic, one of the cornerstones behind Opera Mini’s success.. Amazon already operates as a virtual mobile network operator (MVNO): users of its Kindle 3G e-Reader download e-books via mobile networks, using data minutes leased by Amazon at bulk rates. Offering an Amazon smartphone would be a natural next step to further drive foot traffic. We predict that Amazon will go even further. It would make sense to license out the Silk browser to OEM manufacturers of smartphones or other tablets. The handset maker would then effectively become an Amazon Associate by a classic affiliate marketing mechanism. Amazon extends its reach and can drive more traffic to its retail operations, while the OEM gains an additional revenue stream as a broker of Amazon foot traffic. Meanwhile, Opera and RIM have had split-browser technology in place for years. Why haven’t they been able to capitalize on a similar approach, monetizing customer insights? Don’t forget to download the full, 5-page report in pdf format here. – Stijn @stijnschuermans #amazon #tabletmarket #kindlefire #Android #mobileinsider

[The latest trend in app development is targeting companion screens, as a way to bridge a multi-screen experience. Guest author Peggy Allbright investigates the future of app development on companion screens -and TV apps in particular – and discusses how TV advertising has found a whole new screen to engage users on.] The Future of TV Apps TV applications are opening up a new business frontier for the mobile industry. But we are still in the most nascent phases of the TV app industry’s formation and it needs to evolve on many fronts. Fortunately, early startup activities are revealing some of the roles that devices, apps, developers, merchandising and advertising can play in this industry, as we’ll see in this article. The industry is well aware that consumers want to be engaged with their devices while watching TV and that many consumers are beginning to use mobile devices and apps as interactive “companions” to supplement the TV viewing experience.  New research released by Google in August provides some of the latest data to characterize this trend. Google found that in a typical day, 77% of television viewers use a second device, such as a tablet, smartphone or PC, while watching TV. More than one-fifth (22%) of these consumers are using the TV and their second device in ways that complement each other, even if it is only a simple search related to the live TV programming. The roles of companion devices and apps While it is obviously still very early in the evolution of TV-related apps, the industry is beginning to reveal how it is addressing this emerging market. Communications tools, which give users a way to engage with others in social networking conversations or activities related to a program while it is airing on the TV screen, are the most common types of companion products and the easiest to implement.   For example, yap.TV enables smart phone and tablet users to interact about a TV program via Facebook and Twitter and receive program-specific content feeds. The device and app complement the TV but do not interact with it. TV programming guides that are more user-friendly and feature-rich compared to traditional TV guides represent another role for companion devices. The i.TV app for smartphones and tablets, for example, has an effective programming guide that allows consumers to use their device to search, organize and bookmark their local TV listings and look up background information on TV shows. Remote control applications that can make it possible for a companion device to replace the traditional remote are also becoming available. AT&T in the U.S., for example, has iPhone and iPad apps that enable its U-verse TV customers to use their devices as TV remotes. The set-top box provider Arris has developed an iPad application that will allow consumers to interact with the set-top box, including accessing the programming guide, controlling the TV and scheduling recordings. Apple wants its iPhone and iPad devices to offer remote control features as part of its vision for Apple TV and AirPlay, as an adjunct to these products’ regular functions of streaming content from the web and iOS devices to TV screens. Game console companies are also revealing companion device strategies. Microsoft’s Xbox SmartGlass, for example, enables consumers to connect smartphones, tablets and other devices with Xbox 360 consoles to control what they’re watching on TV, stream media to the TV screen or deliver companion content for videogames, among other functions.  And Nintendo’s next-generation Wii U GamePad, a tablet-like controller, can function as a TV remote or second TV screen in addition to displaying video game content. How developers are building companion apps The role of the TV app and the level of sophistication needed to make it work will depend on its particular use-case. One practical way of looking at this is to characterize the app as serving a lean-back or lean-forward function. Apps that are used in conjunction with a lean-back experience, like movie-watching, complement the viewing experience but don’t distract from it. Apps that are intended to intensify the consumer’s engagement in a live viewing experience, such as a sporting event, will pursue a lean-forward strategy. Fanhattan, a popular video aggregation, movie and TV-show discovery app for the iPad, serves the lean-back scenario. It enables people to conveniently browse actor bios or synopses of individual episodes of serial dramas while the consumer focuses their attention on the TV screen. The AXS TV Fights app for iOS devices, developed by Mobovivo, is a lean-forward app designed to engage the customer in real-time in conjunction with live martial arts events that are broadcast over the AXS TV network in the United States. Consumers can use the app to chat with athletes, fans and event hosts, vote on fight results, and view their rankings on the device leader board, among other activities. Apps can use the TV and companion screens to collaborate in different ways. Interactive apps geared to TV content, such as the AXS TV Fights app, rely on the handheld device for most of the user’s physical interactions so that the TV screen retains its function as the display for the live TV action. Alternatively, apps can use the TV to display leader board rankings or other content while the gaming activity takes place on the device. The level of app interaction with the TV content can vary widely and will impact the effort needed to build the app. Generic apps that have universal audiences, that are aren’t tied to a specific program or TV provider and that put all the functionality on the device, are easiest to develop and distribute, which can minimize risk. Apps that are closely integrated with live TV programs and need to orchestrate collaboration between the two screens will require customization and partnerships with TV companies. Developers pursuing these types of apps will need to acknowledge that the TV program or cable operator will want the consumer more engaged with the TV, not distracted from it, and create their apps with this in mind. Terry Hughes, managing director of AppCarousel, and Alex Gault, vice president of product development and client services of Mobovivo, both believe that the future of these products and services is a complementary one. Hughes emphasized that collaboration between the two screens will be necessary to create really rich user experiences and in doing so it will make TV more engaging. “TV won’t become irrelevant to people but another way for them to consume things they’re already addicted to, like gaming and social chatting,” he said. Gault took the collaborative notion a step further: “As time goes by, applications will be multidimensional. They won’t be just second screen apps, or just TV apps, they’ll work together,” he said. The merchandising and discovery of apps on TV Application developers already know how difficult merchandising and discovery of their products can be in mobile app stores, and any apps based on TV content will be subject to the same challenges. If the app store is hosted on the TV platform, this situation could be much more challenging. Ben Hookway, founder of Etherow, Ltd., believes that the shared nature of TV screens will make app merchandising and discovery difficult to implement from the TV screen because apps are inherently very personal products. “People tend to do personal things on personal technologies, so the preference for consumers will be: I want to find out about apps on my personal device and then have the apps appear on the TV,” he said. Using search tools to look for apps on the TV will also be a challenge, he believes, citing the market’s resistance to using keyboards for TV remotes and the uncertainty surrounding the market’s willingness to use other emerging techniques, like gestures or voice commands, to perform search functions. “Nobody knows what the behaviors will be for undertaking complex search where some sophisticated input is required,” notes Hookway. The advertising flurry around TV apps Advertising has become essential for building awareness of mobile apps and it will be just as necessary for building audiences for TV apps. The TV environment introduces new opportunities for cross-promotions, which is exciting, but it will also unleash new forms of competition for advertising dollars. Advertising a TV-related app on the TV during programs that pertain to the app is a logical way to build an audience and can be expected, especially if the network or TV program is partnering with the app developer on the product.  And TV networks and brands that offer consumer apps can be expected to use the TV medium to promote goods and services to people who are using their apps. Hughes suggested that companies advertising products like automobiles—which are too complicated to explain in detail or price in an ad—could use their TV ads to promote the apps consumers use to configure their cars for purchase. Alan Knitowski, chairman and CEO of Phunware, said his company is making it possible for consumers to use their companion apps in real time to purchase products they see on the TV. Knitowski and Hughes, as well, noted that the consumer’s location data and other analytics generated by the companion device are of great interest to TV advertisers and will be used to deliver very personalized ads to customers who use TV-related apps. Given the magnitude of the TV advertising market, TV apps will become increasingly important as they gain market penetration and sophistication.  Andrew Burke, former CEO of IPTV solutions provider Amino Technologies and former CEO of BT Entertainment, said that growth of the TV apps market could create a shift in the traditional TV advertising industry. He noted that today, TV app developers can often attract advertising revenues traditionally associated with the broadcast programs they address or interact with. If TV advertisers begin to use the second screen app provider for advertising alongside the TV broadcast, Burke said, “We’ll get a redistribution of revenues in broadcast TV.” Burke noted that the opportunity to monetize additional screens through advertising is the reason that BSkyB invested in the social TV platform provider, Zeebox, earlier this year. The move both illustrates and underscores the importance that advertising on TV apps will have in this emerging industry. Given that advertising is the main revenue stream for TV and cable companies, it would be reasonable to expect more deals of this type as the TV audience increases its engagement with companion devices and apps. #crossscreen #tablets #smartphones #tv #tvapps