Post on 15-May-2015
Alex Ferrara, June 23rd, 2010
Confidential
Mobile Computing Roadmap
Proprietary and Confidential
2
Agenda
State of Mobile Computing
Potential Investment Opportunities
Proprietary and Confidential
U.S. Wireless Industry is Large and Mature
Source: ctia.org, Forrester
12/1995 12/2000 12/2005 12/2009U.S. Wireless Subscriber Connections 33.8M 109.5M 207.9M 285.6MWireless Penetration
13% 38% 69% 91%% of total U.S. population
Annualized Total Wireless Revenues $19B $45.3B $113.5B $152.6B % CAGR 19% 20% 8%Annualized Incr. CapEx Investment $5.1B $18.4B $25.2B $20.4B
Almost everyone in the U.S. has a cell phone U.S. wireless penetration at 91% exceeds U.S. PC penetration (~80%)
7%11%
17%
0%
10%
20%
2007 2008 2009
Smartphone Share of U.S. Adult Subscribers
Soon, everyone in the U.S. will have a Smartphone Smartphone adoption forecast of 20%+ CAGR
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Three self-reinforcing trends are driving global adoption of mass mobile computing:
Moore’s Law continues to drive performance/price improvements in smart phones, netbook PCs, and tablet PCs making them increasingly affordable
3G telecom network roll-outs have enabled mobile broadband applications
The massive success of the iPhone has broken the carrier walled garden and created competition among platforms
Smart phone adoption has reached a tipping point; network effects now maintain momentum
Why now? Mobile Computing in a Post iPhone World
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With iPhone, Apple introduced a new mobile computing paradigm that consumers and competitors have embraced
5
User Interface Evolution Over Past 30 Years
Source: Morgan Stanley, T-Mobile
Text TouchGraphical
User Interfa
ce
Keyboard FingersMouse
Input Device
Consumers now have in their pockets:
Fast processor Larger memory High-res screen Broadband Internet CameraGPS
Multi-touch UI Magnetometer Accelerometer Wifi & Bluetooth Good battery life
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Average U.S. Cell Phone User
iPhone User
Data Features
Voice Calls
28minutes
12minutes
27minutes
33minutes
Regular Cell Phone Smartphone iPhone
This is paradigm is more about data, apps, and content than voice and SMS
Daily Usage Breakdown
Source: Morgan Stanley, iSuppli, CTIA, comScore MobiLens
% of Mobile Users Who Consume Digital Content
21%
48%
65%
Average iPhone user spends50% more time per day, 20 minutes, using device
All that extra time is spent on data features and apps
Smart phone consumer value is more about data than voice
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Desktop Internet
AOL*
v 2.0 Launched 9/94
Mobile Internet
NTT docomo i-mode
Launched 6/99
… and it has been a tremendous success
Source: Morgan Stanley, Katy Huberty
20
40
60
80
100
Q1 Q3 Q5 Q7 Q9 Q11 Q13 Q15 Q17 Q19
Quarters Since Launch
Su
bsc
rib
ers
(MM
)
iPhone + iTouch NTT docomo i-mode AOL Netscape
Mobile Internet
iPhone + iTouch
Launched 6/07
~85MM
~31MM
~8MM
Desktop Internet
Netscape*
Launched 12/94
~18MM
Note: *AOL subscribers data not available before CQ3:94; Netscape users limited to US only. Morgan Stanley Research estimates ~50MM netbooks have shipped in first 10 quarters since launch (10/07). Source: Company
Reports , Morgan Stanley Research.
iPhone + iTouch vs. NTT docomo i-mode vs. AOL vs. Netscape UsersFirst 20 Quarters Since Launch
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One implication is that what were devices are becoming features
8Source: Qualcomm
There is (or will be) an app for that
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… and unlike the desktop, consumers are willing to pay for apps and content
9Source: Graphic by Tom Fishburne
Wall Street Journal
10,000 paid app iPad installs @ $17.29 per month in 60 days $3.3m in total annualized revenue ($2.1m subscription + $1.2m in advertising) WSJ.com, a decade-and-a-half old subscription site, has about 400,000 online-only subscribers
– In two months the iPad has added 2.5 percent to that number.
The Times of London
5,000 copies sold in the first 3 days @ £9.99 £49,950 in first 3 days
Early but promising
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How will the paradigm evolve? Looking to analogs
Desktop Internet Mobile In Japan
Infrastructure Infrastructure
Software and Services Platforms
Content / Aggregation Applications / Services / Content
Retail / Commerce Retail / Commerce
Analogous Market Growth Patterns
>>
>
>>
>
Source: Morgan Stanley Research
We are roughly here
With mobile infrastructure adequately developed and Apple as a platform pioneer, activity is increasing among platforms and applications
Mobile Commerce may be around the corner
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How will this paradigm affect the wireless value chain?
11
Brands Advertising Agency
Content & Applicatio
n Providers
Network Aggregato
rCarrier
Government Agencies, FCC, Standards Bodies, Legal Legislation
Industry enablers, Associations, Analysts
Infrastructure Players, Network Component Manufacturers, Handset Manufacturers
New Platforms(iPhone, Android, Blackberry, MS)
Consumers
Source: Adapted from Anderson & Williams, “Unbundling the Mobile Value Chain”
Value is shifting from carriers to new consumer-centric platforms which disintermediate carriers’ “walled gardens”
– Consumers face unprecedented choice of mobile applications and content
– Today the value is accruing to consumers and platform vendors
– As platforms become more open, value will accrue to consumers
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Evidence Seen in the Success of App Ecosystems
Source: Morgan Stanley, Distimo, Nokia, Apple, Google, RIM, NielsenNokia apps exclude wallpapers and ring tones
RIM/Nokia excludes older devices that cannot support App stores
47
22
1210
5
0
5
10
15
20
25
30
35
40
45
50
iPhone/iTouch Android iPad BlackBerry Nokia
Apps DownloadedPer User
Apps Available 200k 50k 3k 5K 7K
Apps Downloaded 4B+ 400M 12M+ - -
Installed Base 86M 10M+ 2M 20M 50-70M
Launch Date Jul-08 Oct-08 Apr-10 Apr-09 May-09
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… and in Apple’s stock price performance
Source: Capital IQ, May 25 2010
5 Year Dividend Adjusted Stock Price:Apple, Google, Microsoft, Palm, RIM, Nokia, AT&T, Verizon, Sprint
Apple+500%
Google, RIM+100%
Everyone Else
Market cap of Apple now exceeds that of Microsoft
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… and in recent industry developments
JAN FEB MAR APR MAY JUN
Apple Ships 2M iPads
Android Hits 100k Activations per Day 18 Months After Launch
Google becomes #2 smartphone OS
HP Announces Palm Acquisition for $1.2b
Ballmer Takes Over Windows Mobile
RIM & Intel Announce Separate Tablets
AT&T Ends Unlimited Data Plan
FTC clears Google/Admob
Industry Analysts Increase Estimates
53% CAGR for iPhone (2008 – 2013)
23% CAGR for Smartphone (2008 – 2013)
iPhone 4 released
2010
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Apple’s Success has Invited Competition
15
Worldwide Smartphone OS Market Share by Sales Volume
Smartphone OS/Platform market remains concentrated but increasingly competitive
– Android share has increased from 0% to 10% in 18 months
– RIM and MSFT also making big investments
Winning platforms are consumer-focused with rich content and applications
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Symbian RIM Apple Google Microsoft Linux Other
1Q08 Market Share 1Q09 Market Share 1Q10 Market Share
Source: Gartner
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55%
23%
10%
6% 5%
0% 0%
46%
21%25%
5%
0% 0% 0%
15%
44%
10%
19%
7%4%
1%0%
10%
20%
30%
40%
50%
60%
iPhone Symbian Android RIM Windows Palm Other
HTML Mobile Page View Share (5/10)
Mobile Internet + App Usage Share (AdMob, 3/10)
Global Unit Shipment Share (Gartner, CQ1:10)
While iPhone & Android Shipment Shares Remain Low, They Have a Disproportionate Share of Web Usage
16
Global Smartphone Share of HTML Mobile Page View / Mobile Internet + App Usage / Unit Shipments
Note: Net Applications collects data from ~160MM monthly visitors on mobile devices that render full HTML pages and JavaScript. Visits to WAP pages are excluded.
Source: AdMob Mobile Metrics Report (3/10), Net Applications (5/10), Gartner (Q1:10).
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Mobile Developers Face Important Considerations
17
Google Android
Advantages:
Native services and more open platform
Java and Eclipse IDE
Considerations:
Hardware profile fragmentation
Smaller install base (for now) Frequent OS updates Fewer countries supported
HTML5 Mobile Web
Advantages:
Open Ultimately it will be necessary
to support
Considerations:
Not widely supported today Lack support for native services
(e.g. gestures, local content)
Source: Google, Admob
AndroidMay 2010
Apple iPhone/iPad
Advantages:
Tight integration with native services and media library
Growing audience across many countries
Predictable platform release cycles
Considerations:
Proprietary platform Apple approval process No Flash / 3rd party SDKs Objective C iAd Payment toll
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Mobile Platform Competition and a Dynamic Ecosystem Create Opportunities for Innovative Startups and VC
Mobile computing growth is creating a land grab among Strategic buyers…Mobile M&A Transactions Announced in Last 9 Months
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Company $ Inv. Investor(s) Date Category
Booyah $20m Accel May, 2010 Mobile applications
Lookout $11m Accel, Khosla May, 2010 Mobile enterprise
SimpleGeo $8.1m Redpoint May, 2010 Location infr. software
Kudzu $7m Norwest May 2010 Mobile commerce
Boku n/a Andreesen Horowitz May 2010 Mobile payments
Transpera $9m RIM, Flybridge, FRC June 2010 Mobile video ad net
… and generating interest among VCsFinancings in Last 60 days
Target Buyer Valuation Investor Category
Starent Cisco $2.9b Public, Matrix, NB, HCP Mobile Infrastructure
Palm HP $1.2b Public Platform
Admob Google $750m Sequoia, Accel, DFJ Ad network
Quattro Apple $275 Highland, Globespan Ad network
Siri Apple $250 Menlo, Morgenthaler Mobile applications
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19
Agenda
State of Mobile Computing
Potential Investment Opportunities (Redacted for Public)
Proprietary and Confidential
1. Mobile health
2. Mobile applications for eldercare
3. Mobile payments
4. Online video
5. Multi-device synchronization & staging (e.g. Evernote, Dropbox)
6. Retail/ecommerce
7. Mobile enterprise
8. Helping carriers avoid becoming dumb pipes
Potential Investment Opportunities (Redacted for Public)
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Thoughts or Comments?
Contact me at alex@bvp.com
Thank You
Thank You
Confidential