On Monday, Levi Shapiro gave a great talk on mobile applications and advertising at a roundtable hosted by my firm, Genesis Partners.
A few takeaways from the session at Genesis:
- Mobile 1.0 is over. Among US wireless subscribers, penetration of mobile games (6%), audio (12%), and premium SMS (5%) has been flat or down for the past 12-18 months. The days of paying real money for 30-second ringtones, commoditized games, or background images are over.
- Mobile 2.0 is about applications. Applications are the only category that is growing in penetration among US subscribers.
- The mobile phone is a first and foremost a practical device. Sure we use our phones for entertainment and music and lots of other things, but the phone’s primary attribute is its practicality. We carry it with us because we need to connect and access information. Applications and services that recognize this and capitalize on it tend to do better than others – and the more practical applications seem to be growing the fastest. This is good news for Israeli companies such as Worldmate and PageOnce.
- Don’t forget MMS. In the US, MMS is growing faster (52% YoY) than WAP (49%), Data (37%), SMS (37%), Video (20%), and downloads (10%).
- Device improvement is the great enabler. We’ve all become aware of this, but Levi showed some pretty compelling statistics demonstrating that smart phones (and the iPhone in particular) are unlocking the mobile internet.
- The iPhone’s importance can not be underestimated. The iPhone’s demographics are very well distributed across age groups and genders. It has moved well beyond early adopters and solidly into the mainstream. Most importantly, the usage patterns of iPhone users are substantially different that those of feature phone users and even of smartphone users.
One more thing: Levi made another statement that struck a chord. The Apple Appstore, he said, might turn out to be the most important innovation of 2008. It’s a statement worth pausing to consider. The AppStore does, in fact, teach us a lot, and its no coincidence that Blackberry, Nokia, Samsung, Palm, and several other players have announced their own app stores. We have yet to see how Android is going to play out, but I expect the ecosystems that get built on the Android platform will take a play or two from Apple’s book.
- Applications are at the core of the mobile experience. This may not be true forever as browsing gets better and cheaper, but its still true today. The iPhone/Blackberry browsers let me view online newspapers just fine, but the WSJ Blackberry Reader and the NY Times’ iPhone app are much better experiences.
- Early adopters will jump through hoops, but the mass market won’t. The easier you make a process (in this case, downloading applications) the broader your potential user base.
- If you can provide a stable OS, a meaningful distribution platform with reach, and a credible monetization option – developers will come.
- “Owning the customer” doesn’t mean locking them in and limiting them. It means getting them to trust you as a source of access to anything they might want (it seems to have worked for Google).
- Apple makes it’s big money (so far) from selling devices…but the experience of using the device is part of the reason people pay and AppStore is a big part of that experience. Apple is converting a solid software SDK into premium hardware revenues.
- “Open” doesn’t necessarily mean totally out of control. Apple keeps a tight lid on the AppStore and who gets to participate in it. There are rules. Those rules may aggravate developers, but they seem to keep users happy. Apple might have found the right balance between open and under control (think Facebook’s structure vs. MySpace’s chaos).
It’s no wonder that when Nokia dreams, it dreams that its Apple.
(By the way, while we did not record Levi’s talk, the GarageGeeks recorded an interview with him, which you can find here. If you can endure ten seconds of Hebrew, the rest is in English.)
