Solfware park Newsletter Vol 3/2013 Eng Version

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Vol.3/2013

APP ECONOMYIS AWAKEN

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Table of Contents

Hot trends in 2013Mobile, cloud, social in ‘controlled collision’

The Dawn of the App Economy Opportunities for developers grow as mobile, cloud dominate

Boom year for smartphones, tabletsMobile data, IT services to be leading money-spinners: IDC

Software Park Thailand adopts global approachNew director: we will train ‘software managers’ with regional reach for talent

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I t d e s c r i b e d t h e a p p e c o n o m y a s “simultaneously global, local and intensely persona l ” . Mob i le apps give businesses the ability to interact with customers and potential customers anywhere in the world, using a hand-carried smartphone, it said.

At the same time, employees can be armed with apps that allow them to become more productive at work, and ordinary consumers can use mobile apps to find local businesses and connect with nearby friends.

The report said both businesses and individual users were recognizing the potential of the app economy and taking advantage of it, and this was leading to a soaring number of app-economy jobs, including those for app developers, the people who design and create the apps being offered for universal use.

App economy awakens The Chairman of Software Park Thailand’s board, Dr. Manoo Ordeedolchest, says that if the “app economy” can be defined as businesses surrounding mobile applications – both consumer apps and enterprise apps – together with related businesses based on mobility, then Thailand is definitely witnessing the beginning of the app-economy era.

“Is the app economy the post-PC era? I do not think so,” Manoo adds. “Do we see notebook computers as mobile devices? I do not think so. Yet serious business users and students worldwide continue to use notebook computers. Although sales of smartphones and tablets have eclipsed those of PCs and notebook computers, they will co-exist with mobile devices for a long time to come.”

According to the global professional-services firm Deloitte, the app economy was worth no more than about US$2 billion in 2012; it was only a small portion of total ICT business. However, mobile apps are becoming a dominant force of change; when

Thailand, much like the rest of the world, is witnessing the dawn of a new ICT era. Although there is debate over whether the changes signal the end of the PC era, the unfolding ecosystem is dominated by mobile devices, social networking and cloud computing. It has become known as the era of the app economy.

The significance of this ICT metamorphosis is captured in a recent high-level economic report published in the United States. Following an analytical study led by the long-standing wireless-communications industry organization CTIA, the Wireless Association, the report said the app ecosystem was strong and growing quickly, and had become an increasingly important part of the US economy. Other partners in the study were the Application Developers Alliance, an industry association for software developers, and economic research and consulting firm South Mountain Economics.

The Dawn of the App EconomyOpportunities for developers grow as mobile, cloud dominate

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working hand-in-hand with cloud computing and social technologies, mobile apps are definitely changing the way people use ICT. The firm believes the economic value will come from cloud computing and mobile devices, and not from apps per se.

The principal and “evangelist” of tech startup Builk Asia, Patai Padungtin, confirms that Thailand is moving into the app-economy era; an era dominated by mobile devices, social technologies and cloud computing. This is obvious from the rapid penetration of smart devices and the change in user behavior, especially where it comes to buying apps, items or any visual goods designed for mass users.

“In my opinion, the post-PC era is coming true because of smart devices and connectivity. The Web and apps are the means of delivering solutions. Many years ago we spoke about the ‘Web economy’. Now, it’s the app economy,” Patai says.

Meanwhile, Dr. Yunyong Teng-amnuay, of Chulalongkorn University’s Department of Computer Engineering, says that in Thailand the app economy is definitely strong, but will be boosted by proliferation of mobile platforms and better networks that encourage the creation of simple cross-platform apps, with better control and connectivity at servers.

“But it is difficult to predict, since the technology is changing so fast,” he says.

More powerful processors in phones and better networks will allow for a voice-app interface. Everything else is at the servers, connected with a voice server as a front end. There will be no more app stores.

Yunyong says that as long as the app ecosystem is still strong in maybe five to 10 years, localization of apps for farmers, students, hair salons and restaurants should provide lots of opportunities. Selling at “Bt25 a pop” for an app updating hair styles should do well, he says, “but if I am right, then I should be rich by now.”

The executive director of the Association of Thai ICT Industry (ATCI), Pravit Chattalada, says Thailand is already in the app-economy era, since the country has long been in the post-PC era.

“Remember when software was a tool to serve our needs? As technology became more advanced and affordable, software turned out to be an agent (brute?) pushing unimaginable stuff into our heads. Thousands of apps weren’t things we wanted, or even thought of, but they simply entertained our insatiable craze. And that was good news for our developers,” Pravit says.

Thailand’s population base is big enough to support apps that fit local ways of life, and the advent of the Asean Economic Community will help. Agencies responsible for ICT must act more rapidly to make ICT affordable “across-the-board”. The value of ICT to the country hinges upon one keyword: affordability, Pravit says. It’s not dependent on Apple’s shipments of the iPhone 5, or Thailand being second to the world’s leader in line use. Those issues simply extend the space known as the country’s “digital gap”.

“Look at our SMEs and startup enthusiasts: they are incredibly smart and creative,” Pravit says. “They only need market demand and the government’s determination to exercise practical incentives. I don’t think it matters where the apps come from, mobile or cloud.”

Opportunities vs challenges for Thai software developers In Manoo’s opinion, opportunities for Thai software developers still focus around business applications based on cloud-social-mobile-information (according to Gartner’s CSMI Nexus). Enterprise mobile apps within the CSMI Nexus environment will

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grow out of necessity, because it is driven by business needs.

However, consumer mobile apps face uncertain market demand, including the problem of severe worldwide competition. With the new service model of the cloud and the need to transform businesses to a service orientation, more mobile apps will be required in addition to existing apps such as customer relationship management (CRM), productivity tools and business intelligence.

Manoo says mobile apps will be working “at the edge”, for the people “at the edge” to connect to the enterprise and its partner network. Thai software developers should be prepared to create software-as-a-service and mobile apps as front-end capabilities. But in order to design good mobile-enterprise apps, they first have to understand the concept of customer value-creation processes, he says.

According to Patai, opportunities “are out there” for developers, but the challenge is how to produce monetized apps in an ocean of apps. The present rough estimate is that there are more than 800,000 apps in the App Store and almost 800,000 apps in Google Play.

He says consumer apps like gaming, social networking, lifestyle and entertainment are very lucrative in the short term. However, enterprise apps still hold potential value to solve business problems.

The founder of AppReview.in.th, Worawisut Pinyoyang, says it is absolutely true that the app economy is coming. Most Internet use in Thailand is dominated by smartphones, which number roughly 30 to 40 per cent of the total population. Smartphones were the first devices from which the Internet could be accessed “on-the-go”. The opportunities for Thai developers are “very huge” because the market no longer has any boundaries, and anyone can invent a new app to solve human problems – such as an app to support people’s short-term memory: to do, notes, list apps, and so on.

“Philip Kotler said that ‘glocalization’ is a trend, hence you can bring ideas from abroad and sell them to the local market,” Worawisut says.

The chief executive of the successful tech startup Ookbee, Natavudh Pungcharoenpong, agrees that Thailand is moving into an app-economy era dominated by mobile devices, social technologies and cloud computing, since mobile apps are said to represent the post-PC era.

He says there are huge opportunities for Thai developers. Until now, they haven’t had distribution and monetization channels to sell their products to world markets, but with the arrival of the App Store and hundreds of millions of users on mobile platforms, the sky is the limit for Thai developers.

Apps are just one aspect of the future Despite the hype that may surround the app ecosystem, apps are not the whole future of the ICT industry. Rather, apps are just one key trend.

Enterprise mobile services form another category that has emerged out of the need for enterprises to mobilise their intranets, and to allow employees to bring their own devices to work (BYOD). However, unlike the consumer-apps space, enterprises have a substantial IT budget per employee, and very stringent requirements for data security, identity management, backend systems integration and support-level agreements.

Dell Indochina’s managing director Anothai Wettayakorn says that apps will become more and more popular and grow along with the expansion of smartphones and tablets, in order to simplify corporate interaction with customers through mobile devices.

Three big and vital trends arose several years ago: IT consumerization, cloud and social networking, and these have driven the growth of many new things, including “the everything app” concept.

“Personally, I don’t believe in the post-PC era. The PC is evolving, and this is also being driven by those three key trends. Bring-your-own-device (BYOD) and Windows tablets are driving adoption in the corporate world of virtual desktop infrastructure (VDI) and cloud client computing. Apps are just one component of all this,” Anothai said.

The pervasive nature of mobile computing and cloud has created millions of opportunities for Thai developers. The market is big and will get bigger and bigger, and is no longer limited to Thailand alone, he says.

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Meanwhile, Cisco Systems (Thailand)’s counry manager Tatchapol Poshyanonda, describes the post-PC era as the “Internet of Things”, including people-to-machine and machine-to-machine, with applications and connectivity (networks) playing a major role. Tablets under US$100 are flooding the market; 10 billion devices are connected to the Internet, while 99 per cent are not, and 60 billion devices will be connected by 2020.

He says application development will evolve along this changing platform, around machine-to-machine interaction and Big Data. The Thai software industry needs to leapfrog into these new trends to be successful.

App economy offers jobs for developers The geography of the app-economy study mentioned at the start of this article showed that jobs in the app economy can be found at enterprises both small and large; tech and non-tech. The US report said it was astonishing how fast many companies had embraced the app economy, hiring the workers needed to develop mobile applications at a rapid rate that was seeing the creation of new specialties and new ways to interact with customers and employees.

However, the core app-economy job is IT-related and uses app-economy skills, or the ability to develop, maintain or support mobile applications.

Based on the US analysis, there are 10 types of companies that hire app-economy workers. The first group, representing the leading edge of the app economy, includes large, medium and small enterprises that may be creating apps for themselves or for clients.

The second group is made up of media and software companies that are engaging in app development for consumer use under their own names. For example, the sports giant ESPN, based in the US state of Connecticut, has a growing collection of mobile products.

Third are finance and retail companies that use apps to reach customers; fourth are other large non-tech companies that are developing apps for internal and customer use, having realized that apps, and mobile computing in general, are essential tools for productivity, marketing and customer service. Fifth are smaller non-tech firms who need a smaller number of app developers.

Sixth are non-profit organizations and government agencies, including the military, that hire app developers directly or indirectly. Seventh are support companies helping to manage all the new technology, and eighth are large companies – including Amazon, Apple, Google, Microsoft and RIM – that develop and maintain mobile app ecosystems or platforms. These are among the largest employers of

app-economy workers, since they are simultaneously maintaining their ecosystems or platforms and developing their own apps.

Ninth are large tech companies that develop essential infrastructure and complementary technologies for the app economy. These include large wireless broadband providers, handset makers and chip companies.

Tenth are accounting and IT consulting firms, who provide app development as part of a larger suite of services. This separate but very important category of app-economy employers includes large operations such Deloitte and the consulting arms of companies such as IBM, which hire mobile-application consultants.

The importance of monetizing apps Today’s developers must not only be coders, designers and entrepreneurs, but also, and perhaps more importantly, astute marketers, to turn ideas into awareness and money. Awareness tends to be the biggest problem, with a chronic condition confronted by all developers: the ‘app discovery bottleneck”. Mobile marketing will only increase in importance, since the app discovery bottleneck is forecast to worsen substantially as the number of available apps skyrockets from the present 1.5 million to 10 million, and while the Apple and Google stores continue to dominate app distribution.

According to a Developer Economics 2013 survey, conducted by VisionMobile with a survey of 3,460 developers across 95 countries, 700 million smartphones shipped in 2012 were underpinned by the Google and Apple duopoly in mobile platforms, which jointly commanded 80 per cent of mobile-developer mindshare. The traditional approach to app marketing has been mobile advertising, which was estimated by Gartner to be a US$11.4-billion market in 2012.

With the mobile handset industry growing at an annual compound rate of 23 per cent, the learning curve of app entrepreneurship is a steep one. The VisionMobile survey suggests that developers have a lot to improve in planning their app business. Of the survey respondents, 49 per cent build apps they want to use themselves, but end up generating the least revenue.

Advertising is now the most popular revenue model for apps, used by 38 per cent of developers in the survey’s global sample. At the same time, it is the monetization model with the least revenue per app. In-app purchases and Freemium are on the rise, having grown by 50 per cent in the preceding year, to be used by more than a quarter of the developers in the survey.

In-app purchases are now the second most-popular revenue model on iOS, with 37 per cent of developers using it, falling slightly behind pay-per-download.

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In an industry where evolutionary change, development and innovation are occurring with bewildering speed, it is often difficult for people in product-oriented IT organizations to look up from “work at the coal face” to see where the wider world of technology is heading. Hence, the global community of analysts, advisers, marketers and consultants delivers its regular forecasts and predictions, enabling the rest of us to see the forest, almost as clearly as the trees. information and services to where decisions are made

and transactions occur. The potential will go far beyond smartphones and tablets to include voice, gesture and location-based interactions; device convergence; digital identity in the pocket; and pervasive mobile computing. Next, it lists social technologies, and says businesses are no longer building technologies just to enable interaction. Dublin-based management and technology consultancy Accenture concurs, with its contention that, today, “every business is a digital business”. Accenture Technology Vision says that mobile, cloud, social, virtualization and big data have been continuously listed as “hot trends”. Now, they are rapidly becoming part of the current generation of technology.

Personal cloud Meanwhile, technology-research firm Gartner says that the new era of computing – the era of the personal cloud – has begun. Online applications and services will transform the consumer-technology market and become the “locations” where users store content and access personal, business and government services. Personal cloud will be a transformational force in both emerging and developed markets. Gartner has also identified what it believes are the top-10 technology trends in 2013. They include mobile, social, cloud and information. It says mobile apps and web technologies such as HTML5 are changing the way applications are designed and developed.

Internet of Things and Big DataAmong the leading evolutionary aspects of technology is the Internet of Things, which is expected to transform from a niche area into a mainstream activity over the next three years. Big Data has also become a major

Hot trends in 2013Mobile, cloud, social in ‘controlled collision’

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Global professional services firm Deloitte, in its analysis of trends in 2013 and beyond, says technology is approaching a convergence – or a “controlled collision” – of five forces: analytics, mobile, social, cloud and cyber. These five forces offer a new set of tools for business, by establishing new rules for operations, performance and competition. IT can now deliver engagement and empowerment to business customers, the firm says in its annual report examining trends in technology.

Mobile and social are the keys Deloitte says the enterprise potential of mobile is greater than today’s smartphone and tablet apps. The next wave of mobile may fundamentally reshape operations, businesses and marketplaces by delivering

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driver of IT spending. Benefits to organizations from adding Big Data to their information-management and analytics infrastructure will force a more rapid cycle of replacement of existing solutions. The rapid changes in infrastructure driven by Big Data are expected to motivate US$232 billion in worldwide IT spending before the end of 2016. Global market intelligence firm International Data Corporation (IDC) believes that Big Data will continue on its growth path, with investment in technologies and services growing to nearly US$10 billion in 2013. But within 2013, the focus of this investment will see an important shift, as more venture-capital funding and mergers and acquisitions will occur in the upper half of the Big Data stack, including analytics and discovery tools and analytic applications.

Enterprise App is coming There is now widespread confirmation that the world has entered the era of the app economy. Gartner has forecast that one of the technology trends in 2013 and beyond will be enterprise apps. An enterprise app store will offer tools to boost returns

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on application investments and reduce risks, license fees and administration costs. However, application, security and sourcing professionals will need to work together to deliver an effective enterprise app store.The success of consumer app stores for mobile applications has generated a lot of interest from IT managers, mostly aimed at supporting the various mobile platforms emerging in their organizations, but also with the potential of extension to PCs and changing the way enterprise applications are delivered.However, enterprises looking to implement private app stores will find themselves obsessing over how to increase a steady supply of apps to drive interest, and how their app store can support broader enterprise platform objectives.

The 3rd Platform IDC believes that the global ICT industry is in the throes of a shift to a new technology platform for growth and innovation – something that might happen once every 20 to 25 years. The current thinking provides for a “third platform” built on mobile devices and apps, cloud services, mobile broadband networks, big data analytics and social technologies.

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Thailand’s information and communications technology (ICT) market is continuing to grow this year, especially for smartphones, tablets and IT services. Spending on ICT is expected to increase in all sectors; government, private and consumer.

The latest forecast from global market-research firm International Data Corporation (IDC) says that Thailand’s ICT spending will also be fueled in 2013 by heavy investment in 3G and telecom infrastructure. The firm expects the Thai ICT market to expand by 9.8 per cent in 2013, reaching US$21 billion, while IT spending alone will account for $12.5 billion, boosted by both the enterprise and consumer markets.

IDC also expects heavy investment to continue from the “top-spending verticals”, such as financial services, telecom organizations and the government. Organizations in the government sector are expected

Boom year for smartphones, tablets Mobile data, IT services to be leading money- spinners: IDC

It is believed that these technologies will drive around 90 per cent of all the growth in the IT market between now and 2020. IDC predicts that worldwide IT spending in 2013 will exceed US$2.1 trillion, up by 5.7 per cent from 2012. The biggest category driving this growth will be smart mobile devices, including smartphones, tablets and e-readers, which will expand by almost 20 per cent in 2013 and generate nearly 57 per cent of the industry’s overall growth. Excluding mobile devices, the IT industry’s growth is forecast to be just 2.9 per cent. Among other major IT categories, worldwide software and services spending are forecast to grow by 6 per cent and 4 per cent, respectively. Cloud will also be a powerful contributor to industry developments in 2013, with the merger and acquisition activity of the past 20 months accelerating. Packaged-application providers like IBM, Microsoft and Oracle will themselves become software-as-a-service (SaaS) providers, and will battle with SaaS pure plays like Salesforce.com and Workday for leadership in some of the major application-software markets.IDC expects there to be an explosion in industry PaaS (public-platform-as-a-service) offerings in 2013 as the market moves up the software stack. PaaS systems, which are cloud-based shared-services environments,

are being tailored to the needs of specific industries. Additional industry-focused solution developers are developing and deploying a range of industry-targeted value-added solutions and services on these platforms. IDC also forecasts that increased use of mobile devices and apps and the migration toward SaaS and industry PaaS will bring about profound changes in the data centers and IT organizations supporting these third-platform solutions.

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to continue rolling out initiatives to connect with government cloud (G-cloud) and the government information network (GIN) in line with the Smart Thailand Master Plan.

The market researcher forecasts that the growth of Thailand’s ICT market this year will be largely driven by the four pillars shaping the future of the global ICT world: cloud, mobility, social business and big data and analytics.

IDC Asia Pacific’s Research Manager for Cross Products and Consulting, Attaphon Satidkanitkul, said that among the factors shaping Thailand’s ICT industry in 2013 would be demand for mobility from consumers and enterprises, evolving business-delivery models that influence ICT spending and increasing competition among telecom service providers in the 3G era. revenue through quality of services. Outsourcing 3.0,

multi-vendors management services and on-demand managed services are good representatives of this new delivery model.

IDC predicts that the Thailand IT-services market will grow by 14.2 per cent, year on year, in 2013, to reach $1.8 billion.

Meanwhile, Thailand’s PC market will probably record only slight expansion and move toward flat growth in the future. This will force PC vendors and channel partners to adopt new strategies to protect their strong footing against new challengers. Thailand’s PC market is expected to grow by less than 4 per cent in 2013, with around four million units shipped.

In sharp contrast, the smartphone and tablet markets are becoming the new battleground, with rising excitement. Thailand’s smartphone market is expected to expand by 40 per cent, year on year, to reach 7.3 million units shipped. The tablet market will grow at a similar rate, with a total shipment of 3.5 million units. Consumers will be the main beneficiaries of this battle, buying new smart devices on the basis of an attractive selection of models and prices, while mobile-phone vendors will focus on pushing strategic marketing strategies with their respective channels to win share in the Thai market.

The resulting surge in the number of smart devices in the country is expected to catalyze the use of digital content from business-content applications to entertainment and lifestyle-related applications.

However, he said that mobile-data services continued to be the highlight of the telecom industry. IDC expects mobile-data services to have a bright future in 2013 via wireless-network services, due to rising demand from end-users and the establishment of fully operational 3G services by the end of the second quarter. The company expects growth in mobile-data spending to reach 14 per cent, or $1.7 billion, with proliferation of smart devices being the main catalyst for demand.

Along with hardware and networking systems, IT services will be one of the leading technology areas to contribute to IT spending in the Thailand market. The revenue of IT services is one of the key indicators with which system integrators’ performance is evaluated, and this year, IT-services offerings will be customized to support real business processes. In other words, this delivery model will generate better

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Software Park Thailand adopts global approachNew director: we will train ‘software managers’ with regional reach for talent

Software Park Thailand’s new director, Chalermpol Tuchinda, has a bold, clear vision of the park’s role in the future of the country’s software industry. He says he wants the park to become a ‘gateway’ connecting local software businesses to potential partners and customers around the world, and he believes its main role is to make Thai software companies strong and competitive, so that they will help the country’s economic development.

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A major part of this plan is the development of software middle-managers who will be regional players, drawing the best of Asean talent to bolster a growing Thai industry. The following are Chalermpol’s answers to some big questions about his new position: What are your priorities as the new director of Software Park Thailand? My short-term goal is to see the park become a ‘business intelligence’ center for Thailand’s software industry, with the aim of opening a ‘global software gateway’ – bridging the gap between the local industry and overseas supply and demand – by 2015. To achieve this goal, the park needs to develop a local software database within this year. I see the park’s main role as supplying business intelligence for the software industry; it will develop a database of software companies, software human resources and software expertise in Thailand. The park must be the center for all activities and requirements related to software in this country. It must have the industry database, including the profiles of software people and the expertise domains of software houses. The park aims to complete this first mission

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by the end of this year, so that if people want any kind of information about the software industry in Thailand, they will think of us and come to us. We will help them to get what they need. We will match, coordinate and organize those requirements to the best local sources through our database and networks here in Thailand. At present, we have a database of 400 companies that have been Software Park Thailand’s incubatees over the past 10 years. We incubate around 50 companies a year, but some of them are not active anymore. About 400 firms are active and continuing to run their businesses.

What is the role of the park in supporting Thailand’s software industry? The park is preparing to bridge the gap between demand and supply in software development by pooling the resources of software parks throughout the country and the region. In this, the park will adopt three levels of software-resource-network pooling. First is the country level, and the Thailand Software Park Alliance provides the link to software parks throughout the country. Second is the alliance of software-park incubation centers throughout Asean, such as those in Malaysia, Indonesia, the Philippines and Vietnam. On this level, the park will offer to match resources, so that these centers help each other to incubate their software firms, and finally match businesses. The third level is collaboration through the Asian-Oceanian Computing Industry Organization (ASOCIO). What is the park’s key agenda? Apart from collaboration, in my term [as director] the park will continue to focus on developing human resources for the software industry. But it will focus on training at the middle-management level; to develop software-project management people. Over the past decade, the park has been developing software human resources with an emphasis on training technicians, such as those

involved in software coding and programming, and has been focusing on software process improvement with the promotion of CMMi standards. From now on, we need to create middle-management resources in our software industry in order to manage software projects and software human resources throughout the region. Currently, we lack developers, and we need to source human resources from other countries. The software-management people, on whose development we aim to focus, will create added value for the software industry because these people will help us to effectively utilize all software human resources, locally and regionally. We will continue to produce software developers, but by focusing on middle management we will give the country a short-cut that will add value to the software industry. We need middle-management people in three areas: software-development managers, software architecture and software-quality managers. To date, we have about 150,000 qualified developers, but this is still behind the industry’s requirements, because it is continuing to increase every day. So we will develop more people to manage software-development projects, with the ability to source software talents both in the country and from the region, to get software-development projects done successfully.

How else will the park promote the software business in Thailand? The park will also play the role of an enabler to help real sectors in Thailand get real benefits from software investment. We will start by focusing on the tourism industry. We will join hands with technology partners, both government organizations and private companies, to establish a common-technology platform to allow software houses to plug in to reach target customers with huge potential in the tourism industry. We would like to see this common-technology platform benefit all stakeholders throughout the tourism ecosystem. This technology platform will be established and running by next year. We will continue to support Thailand’s software industry in both a business role and as an ‘enabler’.

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