Founder LabsSummer EditionThe Mobile Ecosystem

August 12, 2011

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2

Lars Kamp

www.sfmobile.org

San Francisco, CA415.894.5423lars@sfmobile.org

Lars Kamp

Suite 1200560 Mission StreetSan Francisco, CA 94105415.894.5423lars.kamp@accenture.com

Work Network

@l1rs

3

Companies.

4

Today’s topics.

Silicon

Mobile Economics

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

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.

12

… 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

HTC

Dream

Samsung

Behold II

Motorola

Droid

HTC

Nexus One

Samsung

Nexus S

Motorola

Xoom

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

?

Nexus

3

?

Source: Accenture analysis.

13

The IP Wars.

Uggh,

FAWK…

I will eat your babies.

Om nom nomnom.

Me too.

14

Silicon

15

Gordon Moore.

16

Moore’s Law – since ~1965 on the desktop.

Source: Intel.

17

Coming your way in mobile as well.

Today, you are here

Nvidia Tegra roadmap: 2 orders of magnitude until 2014.

Source: NVIDIA.

18

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.

19

Horizontal de-layering of the silicon industry.

19Sources: ARM company website, Cadence company website, Accenture analysis. HW engineers refers to design, SW engineers to validation.Copyright © 2011 Accenture All Rights Reserved.\

Fully Vertically Integrated: Design & Foundry

1970sVertical

Suppliers

ASIC Vendor

System Manufacturer

(Foundry)

1980sASIC

Vendors

Design & Distribution (“Fabless”)

EDA

Foundry

1990sFablessSemis

IP

Design & Distribution

EDA

Foundry

2000sIP-drivenDesign

IP

Design & Distribution

EDA

Foundry

2010sSW-driven

Design

System Porting

“Texas Instruments” “VLSI Technology” “Qualcomm” “ARM” Various

1 : 0 1 : 0.5 1 : 1 1 : 2 1 : 2+RatioHW : SWEngineers

20

ARM vs. QCOM.

20Sources: Google Finance, Accenture analysis.Copyright © 2011 Accenture All Rights Reserved.

0

50

100

150

200

250

300

350

400

450

500

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

ARM announcement that “major OEM” acquired architecture license

in July 2008

QCOM

106 Index

05/12/11

ARM

460 Index

05/12/11

Daily Stock Prices ARM vs. QCOMIndexed, 01/01/2006 – 03/30/2011

21

Apple: A single application processor for all devices.

iPhone

Apple TV Time Capsule ?

iPad

22

2 philosophies: Discrete baseband & CPU vs. a single, integrated SoC.

Apple: Discrete BB & CPU HTC: Integrated SoC with BB & CPU

iPhone 4 HD7

Qualcomm Baseband Apple CPU Qualcomm Snapdragon SoC

Physical separation of computing for RF

and applications through different chips

Logical separation of computing for RF and

applications but physically on same chip

23

The likely future, just untethered.

24

Economics

25

Explosive growth for mobility.

“We really see Mobile a bit like Search was in 2001, 2002, 2003. All these formats are so new it is a mistake to say today whatever we have is a good proxy for what the future will look like. I actually have a new metric to report in Android of 550,000 phones activated a day. That's a huge number, even by Google standards.”

Larry Page, Google CEOQ2’11 Earnings Call, July 14th, 2011

“Mobile” quoted 39 times during call “Mobile” quoted 62 times during call

“eBay mobile apps have been down-loaded more than 45 million times [with] $4 billion of volume on eBay Mobile: […] the mobile device is absolutely lowering the boundary or blurring the boundary between online and offline; […] this has created incremental opportunity far greater than what we would've expected.”

Joe Donahoe, eBay CEOQ2’11 Earnings Call, July 20th, 2011

“We were thrilled to sell a record 20.3 million iPhones compared to 8.4 million in the previous June quarter. This represents 142% year-over-year growth. […] iPhone continues to be adopted as the standard across the enterprise with 91% of the Fortune 500 deployed or testing the device, up from 88% last quarter.”

Peter Oppenheimer, Apple CFOQ3’11 Earnings Call, July 19th, 2011

“iPhone” quoted 48 times during call

“We [...] have articulated a very strong innovation-oriented strategy and mobility plays a very strong part in that. […] If you look at our results this quarter you'll see that it's not only the new categories that drive growth for us, it's also the traditional core business of SAP. […] Mobile will change the way we work and the way we live.”

Jim Hageman Snabe, SAP CEOCNBC Interview July 27th, 2011

26

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 Jobs1994 Rolling Stone interview

Source: Rolling Stone Magazine.

27

SW 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

28

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, USAds Requested, April 2008 – March 2010

Ads

Req

uest

ed (

Mill

ions

)

32% Monthly Growth

(Nov’08-Mar’10)

19 % Monthly Growth

(Apr’08-Mar’10)

RIM

Others incl. Palm & Windows

Source: AdMob, Accenture analysis.

29

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

30

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.

31

Enter analytics…

32

… and push notifications.

33

Facebook: Putting a social layer into your app.

News and Media Companies Commerce and Sales Companies

90% more articles are read85% more time is spent

4x increase in traffic from Facebook

8 minutes longer on site22% more pages are read

$5.30 of direct ticket sales resulted from sharing links

57% more money spent per user

40% increase in referral traffic from visitors

Increase in traffic and time spent on websites through

“Login with Facebook”

Increase in sales through user of social plugins:

“Like” and “Share”

34

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

35

Ephemeralization: “Progressively accomplishing more with less”

Buckminster Fuller

36

Early “ephemeralization” aka “appification”: Devices are being replaced by apps.

Copyright © 2011 Accenture All Rights Reserved.

2006 2011 and Beyond

Camera “Camera”

Credit Card Payments

MP3 Player Music

TV Video

Phone Voice

37

Software “eating” people and things.

People Things

Taxi Dispatcher ATMs Keys

38

And it’s only the beginning.

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.

39

Mobility hardware:This morning at Coupa Café in Palo Alto: “Bump Cube”

40

A quick note on distribution of mobility hardware.

41

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

42

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

43

Cloud

44

Who is building a cloud?

Prineville, OR USA The Dalles, OR USA

Maiden, NC USA Dublin, Ireland

Lockport , NY USA

Morrow, OR USA

45

Stuff you can do with the cloud (growing as we speak).

~65M+ Users Gaming Daily

~ 7,000+ Tweets per Second

~50,000+ Searches Served Per Second

~41B API Callsper Day

46

Stuff you can do with the cloud and your phone.

47

Industrialization of the mobile cloud...

Today

Tomorrow

HTTP(custom libraries)

SDKs

Cloud Device

48

… will bring massive off-deck computing to mobile.

Android

Cloud to Device

Messaging Framework

Project Hawaii &

Project Maui on

Windows Phone 7

Mobile Dev Center

AWS SDKs for

Android & iOS

Source: Corporate websites.

49

Google’s Spanner: 107 = 10M machines.

Source: Google.

50

Ephemeralization of the back-end.

51

What’s Next

52

Jevons’ 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

53

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

54

… 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

)

55

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.

56

And then there is Facebook .

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2.5

2011 2012 2013 2014 2015

US EU BRIC RoW

$8.10

0.7B

$5.7B

-2% -2% 45% 20%

4% 15% 90% 33%

4% 15% 268%* 33%

2.22B

1.27B

2.52B

Worldwide Facebook Usersbased on 3 User Growth Scenarios, EoY (2011-2015)

$8.18

1.0B

$7.3B

$8.20

1.3B

$9.6B

$8.32

1.7B

$12.8B

$8.54

2.2B

$16.8B

Avg. ARPU

EoY Users

$B Rev.

Y-o-Y Growth Rates ’11-15

1

2

3

Scenario 2

Total of ~700-800M global FB users by

end of 2011

57

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

58

Lessons learned. A few thoughts on:

Your Team: Who’s in charge?

Build: iOS vs. Android vs. HTML5

Pitching: Killer exec summary

Funding (Angels): Ocean’s 11

Funding (VC): Lots vs. little

59

Good Luck!