Founder labs new york may 2011
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Founder LabsNYC EditionThe Mobile Ecosystem
May 21, 2011
Licensed under Creative Commons Attribution 3.0 Unported License (http://www.creativecommons.org/licenses/by/3.0)You are free to Share or Remix any part of this work as long as you attribute this work to SF Mobile (sfmobile.org)
2
Lars Kamp
www.sfmobile.org
San Francisco, [email protected]
Lars Kamp
Suite 1200560 Mission StreetSan Francisco, CA [email protected]
Work Network
Management Consulting
@l1rs
3
Companies.
4
Today’s topics.
Mobile Economics
Silicon
Cloud
What’s Next?
History
5
A note on people’s ability to predict the future.
J. C. R. Licklider“Grandfather of the Internet”
”People tend to overestimate
what can be done in one year
and to underestimate what can
be done in five to ten years.”
J. C. R. Licklider, 1965
6
History
7
We’re in NYC, but here’s a bit of Silicon Valley History:General Magic, Apple spin-off, 1990.
“We have a dream of improving the lives of many millions of people by means of small, intimate life support systems that people carry with them everywhere.
These systems will help people to organize their lives, to communicate with other people, and to access information of all kinds.
They will be simple to use, and come in a wide range of models to fit every budget, need, and taste. They will change the way people live and communicate.”
General Magic Mission Statement, May 1990
8
General Magic’s “Magic Cap”.
“Magic Cap” User Interface, 1994
9
Three people from the team that architected Magic Cap.
Andy Rubin Tony Faddel Kevin Lynch
10
General Magic’s lasting influence on Android…
“Magic Cap” UI, 1994 G1 “HTC Dream” UI, 2008
Source: Wired, Accenture analysis.
11
Google is iterating Android at a breathtaking pace…
Oct 2008Android Market
announced.First device.
July 2005Android acquired after Andy Rubin meets with Larry Page for support.
2005 2007 2008 2009 20112010
Sept 2003Android incorporated.
Android uses Google as default search engine.
Nov 2007OHA founded.
“Android” platform unveiled.
Apr 2009Android
SDK released
History of Android
D E FC GSept 2009Donutv1.6
Oct 2009Éclair v2.0
May 2010 FroYo v2.2
April 2009
Cupcakev1.5
Dec2010GiBrv2.3
… HMar2011HoCov3.0
…IH2
2011IC
v3.1
2012
Source: Google, Accenture analysis.
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… including one OEM and SemiCo at a time.
D
Sept 2009Donutv1.6
E
Oct 2009Éclair v2.0
F
May 2010 FroYo v2.2
C
April 2009
Cupcakev1.5
G
Dec2010GiBrv2.3
H
Mar2011HoCov3.0
HTCDream
SamsungBehold II
MotorolaDroid
HTCNexus One
SamsungNexus S
MotorolaXoom
Android Release
“Hero” Device
Chip
Qualcomm MSM7201A 528MHz
QualcommQSD8250998MHz
IntrinsityS5PC1101,000MHz
NVIDIATegra 2 2501,000MHz
TI OMAP3430600 MHz
Qualcomm MSM7201A 528MHz
Nov2011
IceCrmv3.1
I
?
Nexus3
?
Source: Accenture analysis.
13
Economics
14
Software-driven innovation.
” The problem is, in hardware you
can't build a computer that's twice as
good as anyone else's anymore. […]
But you can do it in software.”
Steve Jobs, 1994
Steve JobsApple Founder & CEO (on leave), in 1994 Rolling Stone interview
Source: Rolling Stone Magazine.
15
Mobile is the single biggest global distribution platform.
BroadbandSubscribers
PC Installed Base TV Households
Pay TVSubscribers
Mobile Subscribers
PC TV Mobile
20091.2 Billion
20131.6 Billion
2009420 Million
2013648 Million
20091.3 Billion
20131.33 Billion
2009600 Million
2013739 Million
20094.0 Billion
20135.5 Billion
Source: Gartner, PWC, ITU, IDC, Accenture analysis.
16
Evolution of “the stack”: Shift from hardware to software.
Chipsets,Processors, Basebands
Core Operating System
PhoneMiddleware
ApplicationMiddleware
Hardware
Platform / OS
Middleware
Shell & UIUser Interfaces, App Stores &
User Software
External Interfaces,
e.g. US
B, S
peaker, Flash C
ard
Hardware
CommsSoftware
Early days Today
Mobile Device Stack
1-2 MB of closed software
>1 GB of open software
Hardware Software
Source: Accenture analysis.
17
Value in mobile has moved up the stack…
Services and Content
Chipsets, Processors, Radio Basebands
Core Operating System
DeviceMiddleware
ApplicationMiddleware
Screen, User Interfaces,User Software
Exte
rnal In
terfa
ces,
e.g
. US
B, S
peaker, F
lash
Card
Cost to build ($M)
Per-unit Revenue ($)
Break-even # of units
$0.1M $1.00 0.1M
$10M $0.10 100M
$2,000M $10.00 200M
Valu
e F
low
Hardware Software
Mobile Handset Stack & Elements
Source: Estimates based on industry interviews; see David Wheeler “Linux Kernel 2.6: It's Worth More!” for estimating the cost of the Linux Kernel.
DIRECTIONAL
18
… and is fueling the app store economy: ~350,000 apps.
Catalog Size – Apple App Store vs. Android Market2008-2011, by Number of Available Apps at End of Quarter
Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes books. All numbers rounded.
740 4,400 13,20025,300
52,61074,500
97,000
149,000
225,000
250,000
300,000
350,000
600 2,900 5,200 11,500 20,100 35,200
56,200
130,000
200,000
310,000
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11
ESTIMATES
19
The “early days” with iOS & Android: A mobile revolution.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10
App & Mobile Web Usage Growth over 2 Years, USAds Requested, April 2008 – March 2010
Ads
Req
uest
ed (
Mill
ions
) 55% of Growth
41% of Growth
RIM
Others incl. Palm & Windows
Source: AdMob, Accenture analysis.
20
But: An app is not a business model.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 30 60 90 120 150 1800%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 30 60 90 120 150 1800%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 30 60 90 120 150 180Days After First Measurement
Ret
entio
n R
ate
News (9.1%)
Games (2.4%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 30 60 90 120 150 180
News (9.8%)Enter-tainment (2%)
Days After First Measurement
Source: Flurry, Accenture analysis. User retention defined by the number of users who downloaded an application and launched the application at any time in the past, and also launched the app within the last seven days, e.g. "30 days ago" represents any new user that launched a given app in January and also again within the last seven days. "60 days ago" represents new users identified in December and also used within last 7 days. Sample based on relevant 5-6 apps per category with at least 120 days of data availability in the Flurry system.
Retention Rates of Mobile Apps Over Time, 2010
21
90% dead after 90 days.
52%
40%
34%
35%
33%
20%
9%
10%
9%
4%
58%
38%
34%
38%
42%
18%
5%
10%
7%
16%
iPhone App RetentionAs of January 2010, by Application Category
30 Days 90 Days
Android App RetentionAs of January 2010, by Application Category
News
Social Networking
Games
Lifestyle
Enter-tainment
30 Days 90 Days
39% 10% 42% 11%Average
Retention Rates
Source: Flurry, Accenture analysis.
22
Enter analytics…
23
… and push notifications.
24
Emergence of solid mobile business models.
Location DiscountsInventory Transparency Reviews
Finds deals at local retailers of
national chains
Real time visibility into restaurant
“inventory”
Real-time discounts on local merchant offers
Compare local price with best
prices on the web
“Crowd-source” reviews before buying decision
25
Groupon Merchants App – turning smartphones into a PoS.
26
Opportunities of unparalled scale if you figure it out.
“Mobile is clearly becoming a new way people shop. [eBay has] nearly tripled mobile GMV (gross merchandise value) year-over-year to nearly $2B, with strong holiday shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4B.“
John Donahoe, CEO EbayQ4’10 Earnings Call
Source: Ebay.
27
And you ain’t seen nothin’ yet. (1 of 4)
Global Mobile Shipments2005-2015E, Millions
Total Devices
Mill
ions
777920
1,064 1,039 9541,085 1,105 1,135 1,147 1,151 1,150
57
82
124 151173
303453
582707 820 926
833
1,0021,188 1,190 1,128
1,389
1,5571,718
1,8541,971
2,076
0
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 2010 2011 E 2012 E 2013 E 2014 E 2015 E
SP Share of Total
7% 8% 10% 13% 15% 22% 29% 34% 38% 42% 45%
‘10 –’15 CAGR
8.4%
SmartPhones 25.0%
NonSPs
1.2%
Source: IDC Accenture analysis.
28
A quick note on hardware and distribution thereof.
29
26,500 Apple retail employees selling your HW to 250M+ annual visitors in 323 stores in 11 countries.
Source: Apple.
New York Paris Tokyo
Sydney Munich Shanghai
30
The Apple Store:$13B in sales, with more $/SqFt/Year than Tiffany & Co.
Source: SECfilings, Accenture analysis.
$4,793
$3,010
$866
$425
$391
Retail Revenue
($B)
Retail Stores
(#)
Retail Space
(M SqFt)
FTEs / part-time
employees(K)
13 323 2.5 30
3.1 233 1 9
50.3 4,172 58 180
419 8,970 985 2,100
9.3 204 23.8 52
$397
$337
$279
$200
$179
$102
$36
$33
$128
$125
$ / SqFt / Year ($)
$ / employee / Year ($K)
$ / Day / Store($K)
$ / Store / Year($M)
Scale of Retail Operations Retail Revenue Metrics
Q3 FY2010 –Q2 FY2011
$37
$13
$12
$47
$46
31
2 platforms you absolutely need to understand: Silicon & Cloud
”In addition to making raw computer
power available in a convenient
economical form, a computer utility
would be concerned with almost any
service or function which could in
some way be related to the
processing, storage, collection and
distribution of information.”
Douglas Parkhill, 1966
32
Silicon
33
Moore’s Law – since ~1965 on the desktop.
Source: Intel.
34
Coming your way in mobile as well.
Baseband Processor (aka Modem)
“Fat Modems” Baseband & Application Processor
Low power silicon for voice/SMS and long
battery life.
OS-enablement of light apps running on top
of baseband.
High performance, low power application
processors.
35
Massive on-deck computing power for smartphones...
1966Apollo Guidance
Computer – Block I
4,100 Integrated Circuits
1 MHz Clock Speed
9 KB RAM
2011SamsungGalaxy S2
2016Era of
“Uberphones”
~1B ICs
1GHz+
~4 GB
~26M ICs
1 GHz
512 MB
Source: Computer History Museum, Accenture analysis.
36
… driven by one company in the UK.
37
Orders of magnitude jump in processing power since 2007.
ARM Family ARM11 Cortex
Shipment Date 2007 2009 2010 2012
Chip ARM1136 Cortex-A8 Cortex-A9 Cortex-A15
DMIPs/MHz 1.2 2.0 2.5 2.5
x x x x
Clock Speed 600MHz 1GHz 2GHz 2.5GHz
= = = =
DMIPs/Core 720 2,000 5,000 6,250
Cores/Cluster 1 1 2 4
x x x x
Clusters 1 1 1 4
= = = =
Total Cores 1 1 2 16
Total DMIPS 720 2000 10,000 100,000
~9xProcessing
Speed Increase
Processing Speed Increase
~138x
Doubles on average every ~21 months
“Typical” Moore’s Law behavior for single core processors
Theoretical max computing power increased through multi-core and clustering
HIGHLY SIMPLIFIED
Source: ARM, Accenture analysis.
38
And you ain’t seen nothin’ yet. (2 of 4)
Today, you are here
Nvidia Tegra roadmap: 2 orders of magnitude until 2014.
Source: NVIDIA.
39
Early stage mobile development with chipset SDKs.
40
Cloud
41
Who is building a cloud?
Prineville, OR USA The Dalles, OR USA
Maiden, NC USA Dublin, Ireland
Lockport , NY USA
Morrow, OR USA
42
What is “The Cloud”?
Cluster computing Machine Stack Cloud Benefits
• Cost ReductionLower infra, energy, licen-sing, maintenance costs
• Speed to MarketReduces time requiredto pilot projects
• Elasticity / ScalabilityOn-demand capacity and high business agility
• High Performance Computing“Infinite” computingcapacity as needed
Workloadscoordinated
among many machines tied
together to form a supercomputer
Dis
trib
ute
d S
yste
ms P
latf
orm
Computation
RDBMS
Storage
File System
Cluster Mgmt
Basically the stuff that makes starting a start-up cheap, quick and agile.
43
Stuff you can do with the cloud (growing as we speak).
~65 Million Users Gaming Daily
~ 7,000 Tweets per Second
~40,000 Searches Served Per Second
~1.2 Million Photos Viewed Per Second
44
Stuff you can do with the cloud and your phone.
45
Industrialization of the mobile cloud...
Today
Tomorrow
HTTP(custom libraries)
SDKs
Cloud Device
46
… will bring massive off-deck computing to mobile.
AndroidCloud to Device
Messaging Framework
Project Hawaii & Project Maui on
Windows Phone 7
Mobile Dev CenterAWS SDKs forAndroid & iOS
Source: Corporate websites.
47
And you ain’t seen nothin’ yet. (3 of 4)Google’s Spanner: 107 = 10M machines.
Source: Google.
48
What’s Next
49
Jevon’s Paradox
William S. JevonsFrom the Book “The Coal Question”
” It is a confusion of ideas to suppose
that the economical use of fuel is
equivalent to diminished consumption.
The very contrary is the truth."
William S. Jevons, 1865
50
1950 1960 1970 1980 1990 2000
105
104
103
102
10
U.S. Asset Prices, 1945 - 2008Normalized, 1995 = 100
Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
As computing gets cheaper…
Industrial Equipment
Nor
mal
ized
Pric
e: 1
995
= 1
00(lo
g)
Other Equipment
Transportation Equipment
Computers and Peripheral Equipment
51
… companies consume more of it.
U.S. IT Investment, 1970 - 2008Investment per Employee & Nominal Annual Investment
1970 1975 1980 2000 2005 2010199519901985
3,500 350B
250B
200B
150B
100B
50B
3,000
2,500
2,000
1,500
1,000
500
0
300B
0
Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
IT Investment / Employee
Annual InvestmentA
nuua
lInv
estm
ent p
er E
mpl
oyee
($)
Nom
inal
Anu
ualI
nves
tmen
t ($B
)
52
Plenty of cash.
Cash on Hand for Select Tech Titans Cash and Cash Equivalents, as of 1/26/2011
44
39
35
27
29
22
11
10
7
6
Total of 226B
Source: SEC filings.
53
Think again…
J. C. R. Licklider“Grandfather of the Internet”
”People tend to overestimate
what can be done in one year
and to underestimate what can
be done in five to ten years.”
J. C. R. Licklider, 1965
54
Lessons learned. A few thoughts on:
Your Team: Who’s in charge?
Platform: iOS vs. Android
Pitching: Killer exec summary
Funding (Angels): Ocean’s 11
Funding (VC): Lots vs. little
55
And you ain’t seen nothin’ yet. (4/4)
Your Start-up!
56