A Mobile-Centric View of Silicon Valley Prepared for Opinno & PromoMadrid January 31, 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)
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A Mobile Centric View of Silicon Valley - January 2011
A presentation held at Opinno in San Francisco to a delegration from PromoMadrid. Goal was to provide a quick overview of major trends in mobile in 30 min.
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A Mobile-Centric View of Silicon Valley
Prepared for Opinno & PromoMadrid
January 31, 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)
“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
6
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.”
A: General Magic, 1990. You could say “mobile” started here.
7
General Magic’s “Magic Cap”. Looks familiar?
“Magic Cap” User Interface, 1994
8
Maybe now?
T-Mobile G1 (HTC Dream) User Interface, 2008
9
Three people from the team that architected Magic Cap.
Andy Rubin Tony Faddel Kevin Lynch
10 Source: Wired, SF Mobile analysis.
Economics
11
Software-driven innovation.
” The problem is, in hardware you
can't build a computer that's twice as
good as anyone else's anymore. […]
12
But you can do it in software.”
Steve Jobs, 1994
Steve JobsApple Founder & CEO (on leave), in 1994 Rolling Stone interview
Source: Rolling Stone Magzine.
Mobile is the single biggest global distribution platform.
PC Installed Base TV Households Mobile Subscribers
PC TV Mobile
20091.2 Billion
20091.3 Billion
20094.0 Billion
13
BroadbandSubscribers
Pay TVSubscribers
20131.6 Billion
2009420 Million
2013648 Million
20131.33 Billion
2009600 Million
2013739 Million
4.0 Billion
20135.5 Billion
Source: Gartner, PWC, ITU, IDC, Accenture analysis.
Evolution of “the stack”: Shift from hardware to software.
Phone
ApplicationMiddleware
Middleware
Shell & UIUser Interfaces, App Stores &
User Software
External Interfaces,
e.g. US
B, S
peaker, Flash C
ard
CommsSoftware
Early days Today
Mobile Device Stack
14
Chipsets,Processors, Basebands
Core Operating System
PhoneMiddleware
Hardware
Platform / OS
Middleware
External Interfaces,
e.g. US
B, S
peaker, Flash C
ard
Hardware
1-2 MB of closed software
>1 GB of open software
Hardware Software
Source: Accenture analysis.
Value in mobile is moving up the stack…
Services and Content
Screen, User Interfaces,User Software
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
$20M $0.20 100M
Mobile Handset Stack & Elements
DIRECTIONAL
15
Chipsets, Processors, Radio Basebands
Core Operating System
DeviceMiddleware
ApplicationMiddleware
Exte
rnal In
terfa
ces,
e.g
. US
B, S
peaker, F
lash
Card
$10M $0.10 100M
$1,000M $5.00 200M
Valu
e F
low
Hardware Software
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.
… and is fueling the app store economy.
149,000
211,000
2008 2009 2010
Size of Catalog (K) – Apple App Store vs. Android Market2008-2010, as of Q2 2010, by Number of Available Apps at End of Quarter, Excluding Books
Android
~20,000 monthly submission
16
740 4,40013,200
25,300
52,610
74,500
97,000
600 2,900 5,200 11,500
20,100
35,200
56,200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
App StoreJuly 11
Android MarketOct 22
Day 1 500 Apps
Day 1 62 Apps
~7,000 monthly submission
Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes books. All numbers rounded.
But: An app is not a business model.
60%
70%
80%
90%
100%
60%
70%
80%
90%
100%
60%
70%
80%
90%
100%
Ret
entio
n R
ate
60%
70%
80%
90%
100%
Loyalty and Retention Rates of Mobile Apps Over Time, 2010
17
0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 180
0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 1800%
10%
20%
30%
40%
50%
60%
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%
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.
90% dead after 90 days.
52%
40%
20%
9%
58%
38%
18%
5%
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
30 Days 90 Days
18
34%
35%
33%
10%
9%
4%
34%
38%
42%
10%
7%
16%
Games
Lifestyle
Enter-tainment
39% 10% 42% 11%Average
Retention Rates
Source: Flurry, Accenture analysis.
Expect the center of gravity to shift to post-load.
Post-Load Revenue Streams
Pre-Load Revenue Streams
100%
ILLUSTRATIVE
Ecosystem Revenue Mix Over Time.
19
Primary Revenue Models
• Licensing• Software sales• Hardware sales• Service subscriptions
• Licensing• Ads• Software sales• Hardware sales• Service subscriptions
• Social• Ads• Service subscriptions• Transaction fees• Privacy (User data)
0%
“Yesterday”2000
“Today”2010
“Tomorrow”2015 Onwards
Silicon
20
The one “law” that drives Silicon Valley.
21
Gordon E. MoreCo-founder Intel
Source: Intel.
Moore’s Law – since ~1965 on the desktop.
22 Source: Intel.
Coming your way in mobile as well.
Baseband Processors
“Fat Modems” Baseband & Application Processor
23
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.
One company at the core of the mobile revolution.
24
Massive on-deck computing power.
2GHz
2.5GHz
Cortex-A9
Cortex-A15
20nm
2 cores
4 cores
Mobile Silicon: Process Node, Cores & Clock Speed Over Time
25
533MHz667MHz
800MHz833MHz1GHz
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ARM9
ARM11
Cortex-A8
Cortex-A9
130nm90nm
65nm45nm
32nm
28nm
20nm
Clockspeed:
Cores:
Node:
1 core
1 core
1 core
Source: ARM.
The latest mystery: Apple’s A4 (and A5, A6, etc.).
26
The ARM Architecture – at the core of Apple’s chips.
2007 2008 2009 2010 2011e 2012e
iPxx & TV iPxx & TV
ARM Family ARM11 ARM11 Cortex-A8 Cortex-A8 Cortex-A9 Apple Custom