2010-09-02 fitce presentation bw final

8/3/2019 2010-09-02 FITCE Presentation BW Final

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2010 IBM Corporation

App Ecosystems and their Relevance to CommunicationService Providers (CSPs)

49th FITCE CONGRESS, Santiago de Compostela, September 02, 2010

Bernd Wunderlich


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2010 IBM Corporation2

Poll Question

Who knows about the Wholesale Application Community(WAC)?

Who thinks it will be successful?


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Why CSPs should care - Mobile App Market is going to grow from4.1bn in 2009 to 25 bn in 2014

Overall World Mobile App Market from 2009 to 2014

Market Size:

4.1 bn US$ in 2009 to 25 bn US$ in 2014

Total market size higher as wider revenue opportunities

exists, e.g. upgrade of data plan, reduced churn

Market Growth:

62% CAGR from 2009 to 2012

Market Share:

93% Apple in 2009, 6% Google catching-up

0

10

20

30

2009 2012 2014

App Sales Advertisement

Bn US$

App Sales and Ad Market1

Apple

93%

Android

6%

App Download Market Share 20091

Palm

1%

1Source: Sharma Consulting 2010


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The Market Gap of 93% of the Apps being sold to only 10% ofSmartphones on the market can be filled by CSPs or further DeviceManufacturers

34% Smart

Phone Unit

CAGR

(20082013)

1Source: Gartner, Forecast Global Add-On Functions, April 2009, Forecast Mobile Devices Asia Pacific, 2009, Forecast Mobile Devices Worldwide, 2009

2Source: Frost and Sullivan

0%

20%

40%

60%

80%

100%

2007 2010 2013

% of PhoneShipments

Smartphone Market PenetrationApp1

10% 42%21%

SmartPhones

EnhancedPhones

BasicPhones

Apple10%

Android12%

Symbian42%

RIM

17%

Others19%

Smartphone Market by Share 20142

Smartphone Market Development

The increasing penetration of Smartphones, the two sided business model andMobile Data Rate offerings are enabling the strong growth of the Mobile AppMarket

In 2013 there will be 2.8 bn smartphones versus 1.8 bn desktops


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The over-the-top delivery paradigm has led to unprecendenteddisruptive change in the mobile ecosystem. The Two-SidedBusiness Model and Powerful Devices are key Drivers that enablethis change. CSPs struggle to maintain their level of relationship.

App Insertion/Approval

App HostingApp Sales/

DeliveryDevelopment Consumption

Billing/Charging, Network Enablers, Quality

Broadband Network(DSL, CATV, Edge, UMTS, LTE)

App Store(Device Manufacturer, Operator, Independent)

Source: TM Forum 2010, IBM Analysis

Wholesale Retail

Simplified App Store Ecosystem


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The Apple Phenomenon - Why is Apples App Store so successful?

Source: Morgan Stanley, 148apps.biz, IBM Analysis

More apps drive moreconsumers to

purchase iPhones(26M+) and download

iPhone apps (2B+)

Characteristics

Robust and user-friendly SDK (SoftwareDeveloper Kit) with 800,000 downloads

70%/30% Developer/ Apple Revenue

Split attracts >50,000 Active Publishers

Currently Most attractive CustomerCentric SmartPhone

First centralized Mobile ApplicationStorefront with easy to navigatemarketplace

Easy payment/account management oniTunes (One Click App Purchase)

Rising number ofavailable apps

(>252k)

increasesconsumerchoice

More downloadsleads to higherprofitability for

developers

The Network Effect

Better economicsattract more

developers to the

iPhone platform,creating moreapps


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Industry Problem Definition shows that the Market is dominated by Apples

closed system. The industry fragmentation makes entry more difficult.

Advertiser: Do not have single point of contact from CSPs -> Advertisers therefore prefer

supporting Google (Admob) dominant player (152bn impressions, 100 M$ rev in 2009) andApple.

CSPs: Do not want to become a bit pipe only, but Apples (app store launch in 07/2008)

closed system makes market entry difficult and costly due to device fragmentation.

Device Manufacturers: Problems to enter the market as Apple is the dominant player, need

to take high investments and have difficulty to obtain profitability, but have a lot too loose.

Developer: Devices and technologies are fragmented, developer needs to write apps on

multiple platforms, which results in high development costs while addressing small market sizeper device -> developers therefore prefer iPhone and Android

IT Players: Closed system does not support market entry.

Stakeholder Pain Points


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Fragmentation of Plattforms, Channels, Standards, and Devicesincrease development costs and limit consumer adoption andtherefore a higher market growth for mobile Apps

Device manufacturers,

application providers,

aggregators and CSPs result

in >70 App Stores

Multiple Channels

Fragmentation

Threat

Android, Apple, LiMo,

WebOS, RIM, Symbian,

Windows Mobile

Multiple Plattforms

Device: Cross-platform

WAP, HTML5, JIL, BONDI,

PhoneGap, etc.

Network: GSMA OneAPI

Multiple API Standards

Smartphones vs. Feature

phones

Differing feature sets

Multiple Devices/ Features

1Source: Ovum Eden Zoller, IBM Research


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The Wholesale Applications Community (WAC) is a not-for-profit open

global alliance of currently 24 of the worlds leading CSPs and 3 devicemanufacturers trying to solve the industry fragmentation.

WWWC (W3C) = World Wide Web ConsortiumOMTP = Open Mobile Terminal Platform

CSP Retail

Storefronts

Shared Development Env.

as a Service

App

Certification

andApprov

al

Wholesale

App

Repository

Wholesale

Exposure

Storefront

Network and other Enablers

3rd Party

Storefronts

Service Dev. Toolkit &

Emulator

Developer Community

Support

WAC Overview

WACs objective is to increase theoverall market for mobile applications

WAC will achieve this by enablingdevelopers with a write once, deploy

everywhere, on any device scenario.WAC will use existing standards (JIL,OMTP BONDI, GSMA OneAPI) anddrive a common standard.

WAC will provide a central Developer

Program which will talk to developerswith one voice.

The CSPs are responsible for theApp Storefronts and the Retail part.

Developer

Communities

Developer

Communities

JIL & OMTP

BONDI

Device API2010

JIL & OMTP

BONDI

Device API2010

Common W3C

Device API

Standard

>2011

Common W3C

Device API

Standard

>2011

WAC

Infrastructure

WAC Assets,

Standards

Other

standards

Other

standards

GSMA OneAPIGSMA OneAPI

Source: www.wholesaleappcommunity.com


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WACs Roadmap to Success WAC to crossing the chasm of gaining

Advertiser, Developer, and End User attraction through supporting an OpenDeviceAPI, introducing a variety of Business Models, and quick moves

WACs/ CSPs Competitive Advantages

Deep Customer Relationships to 3 BillionCustomers Worldwide

Information about the customers usageand behaviour

Charging and Billing Capabilities andTrustful Relationships

Influences on the devices (e.g. throughsubsidization, distribution)

Influences on standards

Financial Resources and NetworkAssets

WACs Critical Success Factors

Time to market (Standards, Platform,Devices, Applications on WAC repository)

CSPs to establish various businessmodels (Freemium, Subsidization, Adfunded,etc.)

Right Skills (Leadership, TechnicalSkills, Marketing/ Partner Management,Advertiser)

Attain Mindshare - Attractiveness toDeveloper Community & Advertisers

Financial Resources and ProductInnovation


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Strategic Options for CSPs demonstrate that the WAC option is theoption with the highest likelihood to succeed

Attract.

to

Developers

Flexible

Business

Model

Influence

on

Devices

Attract.

to

SubscriberStrategic Option

Do Nothing

Partner with 3rd

party Ecosystem

Create own AppEcosystem

Partner with WAC

none little very goodgoodmediumlevels of support:

Implications

Might become a bit pipeproviderLoose revenues to substitutesfor e.g. SMS

Little influence on market

Little chances for future

business

Limited number of Apps

Might not be profitable

Ways to differentiate withthrough own business models

Issues might be the Time toMarket

na na na na


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Conclusions

App stores are a very important component of the future mobile internet

CSPs need to play in this market if they want not simply become a bit pipe provider

Apple owned 93% of the App market in 2009, but only 10% of the Smartphone market.CSPs, Device Manufacturers, and Third Party Application Provider compete for the marketgap.

CSPs need to be able to address the two-sided business model and attract developers andcustomers alike, while gaining support from device manufacturers.

WAC seems to the strategic option with the highest likelihood to be successful

CSPs should not see revenue of App sales as the only revenue source, but need to addressa variety of business models to be successful.

2010-09-02 fitce presentation bw final

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