Lars Kamp, Accenture, ever keen eye on next-gen technology on street.

1. Founder Labs – Mobile Edition
Week 1 – Ecosystem Overview & Business Models
January 8, 2011
Licensed under Creative Commons Attribution 3.0 Unported License (http://www.creativecommons.org/licenses/by/3.0)
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2. Work Network
Lars Kamp Lars Kamp
Management Consulting
Suite 1200
560 Mission Street
San Francisco, CA 94105 San Francisco, CA
415.894.5423 415.894.5423
lars.kamp@accenture.com www.sfmobile.org lars@sfmobile.org
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3. Some history (of mobile).
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4. Q: Whose mission statement is this?
“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.”
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5. A: General Magic, 1990. You could say it all started here.
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6. General Magic’s “Magic Cap”. Looks familiar?
“Magic Cap”
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7. Maybe now?
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8. Three people from the team that architected Magic Cap.
Andy Rubin Tony Faddel Kevin Lynch
8 Source: Wired, SF Mobile analysis.

9. Mobile economics.
9

10. Mobile is the single biggest global distribution platform.
PC TV Mobile
PC Installed Base TV Households Mobile Subscribers
2009 2009
1.2 Billion 1.3 Billion
2009
4.0 Billion
2013 2013
1.6 Billion 1.33 Billion
Broadband Pay TV
Subscribers Subscribers
2009 2009
420 Million 600 Million
2013
5.5 Billion
2013 2013
648 Million 739 Million
10 Source: Gartner, PWC, ITU, IDC, Accenture analysis.

11. Evolution of “the stack”: Shift from hardware to software.
Mobile Device Stack
Early days Today
Comms User Interfaces, App Stores &
Shell & UI
e.g. USB, Speaker, Flash Card
e.g. USB, Speaker, Flash Card
Software User Software
External Interfaces,
External Interfaces,
Application
Middleware
Middleware
Phone
Middleware
Hardware Core Operating System
Platform / OS
Drivers Drivers
Chipsets,
Hardware
Processors, Basebands
1-2 MB of >1 GB of open
closed software software
Hardware Software
11 Source: Accenture analysis.

12. Value in mobile is moving up the stack…
DIRECTIONAL
Cost to Per-unit Break-even
Mobile Handset Stack & Elements build ($M) Revenue ($) # of units
Services and Content $0.1M $1.00 0.1M
Screen, User Interfaces,
$20M $0.20 100M
e.g. USB, Speaker, Flash Card
e.g. USB, Speaker, Flash Card
User Software
Value Flow
Application
External Interfaces,
Middleware
$10M $0.10 100M
Device
Middleware
Core Operating System $1,000M $5.00 200M
Chipsets, Processors,
Radio Basebands
Hardware Software
12 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.

13. … and is fueling the app store economy.
Size of Catalog (K) – Apple App Store vs. Android Market
2008-2010, as of Q2 2010, by Number of Available Apps at End of Quarter, Excluding Books
2008 2009 2010
211,000
~20,000 monthly
submission
149,000
Android
Market
Oct 22
App Store
July 11
97,000
Day 1
62 Apps
Day 1 74,500
500 Apps
52,610 56,200
~7,000
monthly
35,200 submission
25,300 20,100
13,200 11,500
740 4,400 2,900 5,200
600
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes
13 books. All numbers rounded.

14. But: An app is not a business model.
Loyalty and Retention Rates of Mobile Apps Over Time, 2010
100%
100% 100%
100%
90%
90% 90%
90%
80%
80% 80%
80%
70%
70% 70%
70%
Retention Rate
60%
60% 60%
60%
50%
50% 50%
50%
40%
40% 40%
40%
30%
30% 30%
30%
20%
20% 20%
20%
10%
10% News (9.8%) 10%
10% News (9.1%)
Enter-
Games (2.4%)
0%
0% tainment (2%) 0%
0%
0 30 60 90 120 150 180 0
0 30
30 60
60 90
90 120
120 150
150 180
180
0 30 60 90 120 150 180
Days After First Measurement 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
14 category with at least 120 days of data availability in the Flurry system.

15. 90% dead after 90 days.
iPhone App Retention Android App Retention
As of January 2010, by Application Category As of January 2010, by Application Category
30 Days 90 Days 30 Days 90 Days
News 52% 20% 58% 18%
Social 40% 9% 38% 5%
Networking
Games 34% 10% 34% 10%
Lifestyle 35% 9% 38% 7%
Enter-
33% 4% 42% 16%
tainment
Average
Retention 39% 10% 42% 11%
Rates
15 Source: Flurry, Accenture analysis.

16. The cloud.
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17. What is “The Cloud”?
A style of computing that provides on demand access to a shared set of
highly scalable services.
Cloud Origins Cloud Today Cloud Benefits
• Cost Reduction
Virtualization Lower infrastructure,
One computer • Virtualization and energy, licensing and
Grid abstracted maintenance costs
acting like
many • Computing as a • Speed to Market
utility Reduces time required
to pilot projects
+ • Scale economies
of central supply
• Uses massively-
• Elasticity / Scalability
On-demand capacity and
high business agility
Grid parallel processing
Computing • Geo-distributed • High Performance
Many with massive Computing
redundancy Provides “infinite”
computers computing
acting like one capacity as needed
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18. Who is building a cloud?
Facebook – Prineville Yahoo – Lockport Google – The Dalles
Apple – Maiden Amazon – Morrow Microsoft – Dublin
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19. The cloud: massive off-deck computing for mobile.
19 Source: Amazon press release, December 2010.

20. Silicon.
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21. Moore’s Law – since ~1965 on the desktop.
21 Source: Intel.

22. The original paper from 1965.
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23. Coming your way in mobile as well.
Baseband “Fat Modems” Baseband &
Processors Application Processor
Low power silicon for OS-enablement of light High performance, low
voice/SMS and long apps running on top of power application
battery life. baseband. processors.
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24. Massive on-deck computing power.
Mobile Silicon: Chip Size, Cores & Clock Speed Over Time
2.5GHz
2GHz
4 cores
Cortex-A15
2 cores
Cortex-A9
1GHz 20nm
833MHz
800MHz 1 core
667MHz 28nm
533MHz Cortex-A8
1 core
Clockspeed: ARM11 32nm
1 core 45nm
Cores: ARM9 65nm
90nm
Node: 130nm
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
24 Source: ARM.

25. Development before knowing the actual device.
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26. Business models.
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27. Four quadrants and generic business models.
Pre-Load Post-Load
Cloud • SDK and • Transaction fee
developer fees • Subscriptions
to marketplace • Advertising
• Software sales
• In-app
to aid app
development • Display / search
and design • Multimedia
• IP licensing • App sales
• Pre-installed app • Virtual goods
licensing • Digital media
• Software sales sales
• Hardware • Subscriptions
sales/materials
Device
27 Source: Adjusted based on Vision Mobile (visionmobile.com).

28. Business models applied.
Pre-Load Post-Load
Cloud
Device
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29. Expect the center of gravity to shift to post-load.
ILLUSTRATIVE
Ecosystem Revenue Mix Over Time.
100% Pre-Load Revenue Post-Load Revenue
Streams Streams
0%
“Yesterday” “Today” “Tomorrow”
2000 2010 2015 Onwards
Primary • Licensing • Licensing • Social
Revenue • Software sales • Ads • Ads
Models • Hardware sales • Software sales • Service subscriptions
• Service subscriptions • Hardware sales • Transaction fees
• Service subscriptions • Privacy (User data)
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30. A few ideas…
Enterprise Apps Untapped market w/ customers who are used to paying lots of money for bad software.
Consumer Apps Gaming, social networking, dating, digital marketing are still in the nascent stage for mobile.
Cloud Services Apps need to connect; remote service access; solves fragmentation – runs in browser.
Security Prevent abuse of sensitive data that resides on or can be accessed over mobile device.
Enablers On-device engagement requires enablers, e.g. authentication, payments, middleware
Analytics Engagement data provides opportunity for data mining for e.g. tracking, reporting purposes
Shannon’s Law Between powerful devices and clouds, wireless links remain the bottleneck.
Devices Power-efficient devices, enabled with mobile OS, for vertical purposes, e.g. healthcare
Smart Grid Drive efficiency in electrical grids through mobile web services and devices.
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31. And with that… Good luck!
Nada, 1988
“I have come here to
chew bubblegum and
kick ass...and I'm all
out of bubblegum.”
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