Gabor Torok's Forum Nokia Blog

On Google's move in navigation

tote_b5 — Thu, 05 Nov 2009 02:37:11 +0100

It's been announced a couple of days ago that turn-by-turn GPS navigation would be supported soon on devices based on Android 2.0 platform. Free of charge. The new Google Maps Navigation offers free turn-by-turn navigation garnished with Google's core business (search by voice and in plain English, search along route) and existing services (traffic, satellite and street views) for Android devices.

I was shocked to hear this news. The two biggest map data providers, Tele Atlas and Navteq, have been acquired a few years ago, former for $2.9bn by TomTom latter for $8.1bn by Nokia. Their main revenue sources were licensed map data and value added services e.g. turn-by-turn navigation. Since Google uses either its own map data or one that is freely available, I think I told everything: they do whatever they want. It is still unknown how Google will monetize on the new service - other than ruining competitors -, but advertisement seems to be a very likely option.

On a related note, I found Bill Gurley's article on Less than free business model quite interesting. Briefly, Google offers Android to OEMs free of royalty, even more, they pay ad split to them. In other words, it's not only that OEMs don't have to pay, but on the contrary, they will get paid. One of the commenters of this article gave a hint on another business model that Google may try to follow: don't bother with ads, but offer a package to navigation device makers, news agencies, automakers, roadside advertisers, etc. A package that is based on continuously updated traffic data that can be used to provide always optimal routing information.

How can competitors react on Google's move? Without own map data it's very difficult to compete with someone who's giving away the same service that we are selling.

Stefan from IntoMobile suggested that Nokia should make map data free and wait for the flood of new mapping services - let's see what innovation will result in. Not a bad idea, but would leave Nokia in a bit of passive role, wouldn't it?
The other option could be to do the same as Google may do in the future: sell a package instead of showing ads (see above). Why Nokia? Because it has maps data. Which platform? It's rather Maemo than Symbian - we're talking not only about mobile phones, but other embedded devices, too.
Finally, the third option is advertising and provide free service. Who? Microsoft doesn't have own map data, but has Bing and Yahoo! search, which is a good basis for advertising. Whereas Nokia doesn't have search, but has maps data (I told you that Nokia should have bought Yahoo!). Perhaps these companies should form an alliance?

Looking forward to your comments,

Tote

mobile-thoughts.blogspot.com

Enterprise Mobility Development

tote_b5 — Wed, 28 Oct 2009 23:06:40 +0100

Some of you might have read one of my previous posts in which I wrote that I had had to choose between mobile and enterprise development mostly for personal reasons. I was sorry to realize this because mobile is my passion, but I thought the change was inevitable. Now I don't.

It's a cliche that the job market is much bigger for enterprise developers than for mobile devs. That was one of the main reasons why I had to change area, too - not as if I didn't enjoy enterprise as well. The interesting thing I've just come to realize that there's a gap between the boundaries of the two areas: it's for people with knowledge on both (otherwise huge) areas. The opportunity is great for both kinds of developers coming from either direction, because it offers a way to reach out even more people.

Now you understand why I read an article the other day with great interest: it described the required skill set for an enterprise mobility developer. First, it just confirmed that my theory was right: there's a need for such people. Second, let me add some more points to the list provided. I could have extended the list on the original blog post, however, for that I should have had an account on that site which I was reluctant to create. Here's the list:

Bandwidth: I think it was network what the author really meant. Bandwidth really is one of the characteristics that one needs to pay attention to, but it's also worth mentioning different types of networks (from 2G to 3.5G, WiFi, VPN, etc.), their main characteristics (e,g IP address re-assignments, frequent network outage), roaming, etc.
Options for development: today's popular web development (very important to note that it's mostly applicable for smartphones only, thus not an option for the vast majority of mobile phones) vs native vs any other environments.
Testing: never-ever forget that emulator/simulator is not the same as the real hardware. Peculiarities of various networks also count (quality, reliability, QoS, etc.).
Option for cross-platform development: one company may target one platform at a time, however, it's also wise to plan ahead and build the foundation with the future in mind.
Deployment, maintenance: app stores vs downloadable install packages from own site. Keeping enterprise service and mobile client versions in sync so that they're always fully inter-operable. Auto-update. Etc.
Monetization, marketing: what I really mean here is making use of app stores as efficiently as possible. It's today's trend for mobile manufacturers to have their own stores and compete with carriers who would also like to monetize on this opportunity (by having their own stores). Sort of a war between vertical (manufacturers) and horizontal (carriers).

And I'm sure we've still missed a lot from the list. In any case, that was my two cents. :)

Cheers,

Tote

mobile-thoughts.blogspot.com

The $1 business model

tote_b5 — Mon, 23 Mar 2009 02:08:53 +0100

There are two kinds of developers: those who want to sell their programs and those who write software for fun and/or for fame. The latter type is happy with writing freeware, most probably open source software. This article is about the former.

Of course, most developers want to get paid for their programs. As much as possible. The wiser usually analyses the market first:

Would people be interested in the program?
Would they be willing to pay for it?
How much will they think the program is worth?
What about competition, would our program fill a gap or it would just be one of the many?
How can I sell my program, what distribution channels are available, what is the revenue share, etc?
How much do I need to invest in writing the program financially, in terms of effort, etc.?

And the list is not over yet. But it contains the most important question from this article's point of view: how much is a program worth, how much can we ask for it? Note: the answers to these questions are not necessarily the same.

It is very difficult to foretell how much a program is worth for the users. The answer depends on so many factors, such as target group, their spending habits, type of software (e.g. leisure vs professional), what other programs with similar feature-set cost, etc. Naturally, price calculation is so often affected by that how much a developer appreciates his/her own software ("I put so many hours in creating it that it can't be cheap!") - and the expectations and the reality are not always in balance.

The available distribution channels also influence the final price: what they demand from the developer, what they offer to him, their revenue sharing model, etc. As to the latter, for example, although the 70-30 revenue share wasn't typical 1-2 years ago it is now becoming a standard. Apple's App Store, OHA's Android Market, Nokia's soon-to-be-opened Ovi Store all offer 70% off the revenue to the developer. Revenue share is not everything, though: for example, App Store is such a place where it's not uncommon to hear success stories and big earnings, whereas Android Market's community prefers free software. If you follow the news, you might have heard of the coming BlackBerry App World. I found it very interesting that they set the minimum price for a paid-for application to be $3. They said any software that is not worth this amount shall be freeware. I think it's ridiculous: these guys are not aware of how many developer they will alienate from themselves with this approach. Do they really want developers to sell BB apps or not?

The typical revenue models for developers are as follows:

Release free application first with limited features and make it paid when it really gets traction (thousands, tens of thousand downloads per month). The application is available either for free or as paid-for (exclusive OR). Question: won't people turn away from your application once they have to pay for it?
Write an always paid program, which means that your application must be really cool and advertised so well that despite the price (i.e. that it costs money) people buy it. Question: can you compete with free programs with similar features?
Make a Lite and Pro version of your program, Lite being free and Pro paid. The free version supports a subset of Pro's features making it compelling enough to purchase the paid version. It is a very typical approach among developers. Notes: increased maintenance efforts + separation of free and paid-for features must be well thought-out.
Free program with ads. Notes:
- Not all people like ads
- You need to find a good ad provider
- It is challenging to implement a good advertising solution on mobile devices, and there is no good framework available.
Change model dynamically on an experimental basis: see if you can make it with paid version, if not then make it free, then make it paid again when it becomes popular (this is the path iStrip followed, actually). Question: when will people get bored with this behavior?

Please note that I did not include that model in the above list, where the client program is free, but it is essentially a light-weight interface to a server solution, which is exactly what your customers are paying for. Opera Mini's business model is based on this, for example: Opera Mini, the application, is available for anyone as a free download, however, it's Opera's customers (i.e network operators), who pay the price. This article is simply not about this model.

It's also worth noting how important user ratings have become recently. Some developers faced that ratings can kill: unhappy-uneducated users gave low ratings just because "game was too short", they "expected more", "it was free not too long ago", etc. Perhaps these users are not aware of how much power they have in their hands when they rate. Applications written for Android platform and distributed on Android Market are especially vulnerable to this effect.

Finally, getting closer to the point: how much can we ask for a program? Even though this habit is changing, it's still quite typical from people that they think that "cheap cannot be good" or "if it's good it can't be cheap". However, App Store's success stories have proven right the opposite: developers claimed that their revenue had become much higher when they lowered the price to $0.99. You know, this is such a low price that basically anyone can afford around the world even for the silliest program. Developers are now facing the fact that unless they sell their software at the lowest price there will be others who ask less than them. This basically forces them to sell their apps for $1 from the beginning.

Is it the final price, though? Can a $1 hit be sold for $2, too? No-one knows. It's all about making experiments. If I were to sell my app that I think is worth more than being distributed as a freeware, I would ask $1 for it. If people don't buy it at this low price, then I saved the hassle of price calibration. If it gets successful and my program is (one of) the best(s) in its category, then I would increase the price gradually until the download rate gets stabilized and I couldn't expect more revenue from making it even more expensive.

And actually this is what I call the $1 business model.

Looking forwad to your comments,

Tote

mobile-thoughts.blogspot.com

Smartphone statistics, 2008

tote_b5 — Thu, 12 Mar 2009 17:16:54 +0100

Gartner released their statistics about worldwide smartphone sales, which contains useful information not only the previous quarter (Q4 2008), but the whole past year. I'd like to share the following two figures with you:

Comments:

Nokia is still #1, but it's market position is seriously challenged by RIM, Apple and HTC.
Even Apple is suffering from decreased sales in Q4, but that didn't prevent them from being ranked as the third vendor by sales.

Comments:

Symbian had lived better days a year ago, but it's still a bit more than 50% of smartphones that runs this operating system.
RIM and Mac OS X performed exceptionally well even during the tough economical situation.
Although the share of Windows Mobile shrank a bit, it still maintains its third position. Only blinds can't see that not for long.

Finally, some words on regional sales:

Dramatic increase (69%) is experienced in sales of smartphone in North-America, which now accounts for 20% of mobile phones in this region. Carriers are agressivelypushing data plans that is beneficial for vendors, too, offering vertical mobile solutions from hardware manufacturing to providing developer SDKs to cloud services.
While overall device sales dropped, Asia/Pacific recorded a 2.3% growth in smartphone sales.
EMEA region were up by only 2%, Western-Europe sales increased by 9.6%. Samsung drove sales in 2008 with Omnia as its most successful product.

Tote

mobile-thoughts.blogspot.com