Thursday, August 6, 2009

The Cable iWatch and App Store

It sounds very believable doesn’t it? Apple has demonstrated that a path to a successful business is to combine a great, closed hardware platform and entertainment content such as music, movies, TV shows, and even user generated content. Then after establishing Apple as the leader in the personal entertainment platform, Apple found a second wind to drive the revenue engine. The answer was to open the platform to application developers, vet applications, and facilitate their purchase. Apple’s hardware and iTunes combination has in fact created such momentum that it is hard to see anyone catching them in the near future.

The other cell phone manufactures and service providers have been scrambling to create App Stores to compete with Apple. I think there is a far more obvious iTunes and App Store opportunity with the TV service providers – cable companies and iPTV providers like AT&T’s U-verse. They have a good, closed hardware platform and have access to entertainment content. I know there have been arguments that video is not like music, consumers won’t view movies over and over like music and therefore anything not based on music will fail. This completely misses the real value in the Apple platform which is its simple interface, lots of content, and it is relatively inexpensive for the perceived value.

iWatch

In addition to the obvious feature to serve recently aired episodes, there is a great opportunities to access the “Long Tail” of content interests much like Amazon does with books. This uncovered a latent consumer need that dramatically hurt brick and mortar bookstores that simply could not carry the inventory. TV service providers could provide viewers the ability to find and view obscure content easily. I am sure there is technology that would insert advertising for free or subsidized options or simply charge a small fee, $.99 comes to mind for a half hour episode.

The App Store

There are reported to be over 65,000 apps in the iTunes App Store and over 1.5 billion app downloads. Are they all great or necessary or even useful? No, but the sheer volume suggests that there is a viable business model that would interest both developers and consumers. With 125 Million homes passed in the US alone and 41 Million digital subscribers, this is a market that dwarfs the iPod/iPhone numbers. Would developers jump at the chance to provide apps via the TV even with a 30% service provider company cut? I think the answer is a resounding yes.

So what’s the hold up?

The problem seems to come from three areas. First, and I think the largest force, is that the cable industry has been a protected monopoly/duopoly across the country. As a trade-off for the large infrastructure investments to roll-out cable services, the cable companies were given monopolies in a region. Their only completion eventually became the satellite based providers and recently AT&T or Verizon with iPTV. The result is an industry that has never had real competition or a market in which consumers had much choice. This force has had two affects. We as consumers have lowered our expectations and the service providers have never felt very threatened.

Second, the technology platform requires a significant investment and subsidization by the provider. Although this has always been a good investment, once the equipment is deployed it is very difficult to replace it during its most profitable years. Also, before two-way interactivity it has been difficult to identify a new revenue stream to offset the equipment premium. Even now it is a bit of a gamble and far from a sure bet.

Lastly, video content owners have been even more reluctant to break out of their antiquated business models. The music industry was forced out of their model and is still recovering. Video content owners have fought to keep their assets tightly locked down and not Napster-ized. Service providers could easily claim that they would like to be more innovative but their hands were tied.

What’s the risk?

Recently, Yankee Group was presenting a perspective that the wireless service providers need to stop the substantial handset subsidization. Citing the calculation that AT&T had spent over $600M in iPhone subsidies during the quarter in which the launched the iPhone 3Gs. How does that apply here? AT&T has put itself in the unenviable position of a dumb pipe. They must provide the network but get little of the increases created by the iPhone. There is a risk that by fighting the innovations for too long will relegate the service providers to dumb pipe providers.

The biggest risk is, of course, also the biggest fear of the service providers – OTT – over the top. Industry lingo for services and content accessed “over the top” of the service provider’s infrastructure via the Internet. YouTube, Hulu and Boxee have demonstrated the potential of OTT opportunities. Are we all going to “cut the cord” and get all our programming from online services? Of course not, but the trend is there. The Pew Internet and American Life Project’s latest survey of American Internet habits, done in April showed that roughly 35% of Internet users surveyed said they had watched a TV show or movie online, up from 16% who had done so when asked in 2007. Nearly a quarter of those watching Internet-delivered TV and movies watch on their TV. Pew reports that 23% said they connected their PC to a TV screen to watch online video. Online video is growing quickly. It is now the top activity for consumers. According to Pew, 62% of online users watched video through a sharing site in April, topping the 46% of Internet users who used a social networking site, the 19% who downloaded a podcast and the 11% that updated their status on Twitter. And as I have pointed out in early posts about generational affects, an overwhelming 89% of adults ages 18 to 29 now watch online video, and more than one-third, 36%, do so daily.

Although cord-cutting households are relatively few, estimated at 2-5% the trend should be a wake-up call to the industry – the time is now to embrace a more open model. Sadly, the fear aspect is not strong enough yet to motivate serious action and unfortunately for the industry the belief in the revenue growth potential is not there either.

Tuesday, June 16, 2009

Parents Adapt to Texting

Once a generation's technology baseline is set, generally in their early twenties, all new technology becomes an adaptive experience. In other words, as adults, we will assess the new technology in terms of something we are already doing and evaluate whether or not it will improve the experience - make it easier, cheaper, quicker, more effective, etc. Based on that evaluation, we may give the new technology a try and continue if our expectations are met. Parents’ embracing of texting is a great example. AT&T released the results of a somewhat self-promoting study on texting habits of parents and children.

An interesting and predicable finding in terms of generational expectations was that, "text messaging has proved to be a powerful tool to help parents and kids close the communications gap," said Alecia Bridgwater, director of Messaging for AT&T's wireless unit. Also predictably, the study found a clear difference between the generations. Children text most often with their friends however, parents text most often with their children. That is because children are using texting as the preferred, innate, method of communicating with friends. Parents on the other hand are being forced to adapt to texting in order to communicate with their children.

Texting is solidly part of the current children's technology baseline as 84 percent find it easier than calling friends and 65 percent like the privacy - sadly no more eavesdropping mom and dad. I predict texting will continue to grow with parents as they begin to text each other. The more adaptive adoption that occurs with older generations the more texting will become common between adults who started because of their children. No, we will probably never be good with the texting lingo but it will serve a basic, quick communication need for us.

Wednesday, June 10, 2009

Utilities will not "give" Google energy data

Last week I had dinner with a few colleagues and Austin Energy's CIO Andres Carvallo who was a keynote speaker for the Park's Associates Connections 2009 conference. Carvallo is an energetic, entertaining guy with a diverse background and is clearly a smart guy (follow him on Twitter, ciomaster). I decided to test my hypothesis that utilities would not give Google their energy usage data for PowerMeter. Austin Energy is one of the leaders in the US in implementing Smart Energy (Grid, Meters, Demand Response, etc.)and so I was very interested to hear Carvallo's perspective. Sure enough and even with a bit of disgust, he said there is no way he is giving his energy data to Google. "Why would I?" he asked. Carvallo strikes me as a smart business guy so his question makes a lot of sense. Why would any business give away their consumer data? Would Visa give away aggregated purchase data? Or for that matter, does Google give away search data? Nope and neither will the smart energy companies.

Energy companies must get ahead of this however, simply stonewalling is not sustainable. A new business model that creates consumer value and replaces lost energy profits is required.

Saturday, June 6, 2009

[Young] Adult Ice Cream Truck


As I discussed the Cooking versus Eating blog post, especially for younger generations, eating is becoming more about the social and entertainment experiences. I came across a great example of this in an article about the Fojol Brothers of Merlindia, a food truck in Washington DC. You may ask yourself, how could a food truck be a social and entertaining eating example? Here's how...

Make it fun

Much like the summer sounds of the neighborhood ice cream truck, the Fojol Brothers brightly decorated truck plays circus music. And the fun doesn't stop there, the Fojol Brothers get-ups - fake mustaches and bright gloves to match their psychedelic turbans communicate a fun tone. There is no confusion with any other mobile food trucks I am sure.

Make it exclusive

Fojol Brothers’ menu captures exotic fare from Merlinda. Ever had some of the native dishes of Merlinda? No? Largely because it doesn’t exist. The food takes clues from Indian dishes but the key is that it is unique. This uniqueness adds to the “Eating” experience as customer discover new foods that they cannot get anywhere else or recreate easily at home.

Make it targeted

Another aspect of the unique experience is defined by the hours of operation. Ever notice how the ice cream truck seems to appear just after dinner on nice summer evenings? Fojol Brothers are not available during weekday lunch hours for the masses but instead target weekend evenings through late night, catering to a younger crowd as they frequent bars and parties. By doing so they have made the stop for food part of the night’s social activities.

Make it current

Although the circus music and brightly colored truck are no doubt great for drawing a close by crowd, how can the Fojol Brothers extend the music? Technology of course, Twitter to be specific. From the Washington Post article, "in the case of street food, Twitter becomes an agile, personable tool that's not tethered to a desk." So while most street vendors are tied to specific intersections or pockets of the Mall, the Fojol Brothers of Merlindia usually take a lap around the city before settling on a vacant parking spot and announcing the location on Twitter. "It's a traveling culinary carnival," they yell to pedestrians in popular hangouts (Chinatown, Dupont Circle, Georgetown), waving from the windows as they drive by, blasting playful circus music. Communications is critical when you are a mobile business and change locations day to day. Their location tweets are the ice cream truck music on steroids.

Make it more than just food

Another, perhaps well thought out, part of the Fojol Brothers offering is their environmental position. Much of the research in which I have been a part of and those I have reviewed indicates the importance of the environment to the Gen Y demographic. Whether knowingly or not, the Fojol Brothers strong stance on the environment fits perfectly with their target customers.

So what can you learn from the Fojol Brothers?

A couple things, I think, first sometimes targeting everyone means you target no one. Although an ice cream truck may make a few sales in the middle of the day, clearly the best time for their customers is right after dinner. Also the exclusivity of the ice cream truck pass by made it special. Fojol Brothers know that the bulk of their customers are Gen Yer’s you are out enjoying themselves on the weekend. Target your customer even if that means missing many other potential customers. Second, although I am sure their food is very good (they searched the DC area for a chef) the big attraction is the experience and not just the food. Add a richer, entertaining experience to whatever you are selling.

Wednesday, May 27, 2009

74% of consumers age 64+ use e-mail on a regular basis which is 1% higher than teenagers

Another headline that grabbed my attention when I saw it was from a Pew Internet study. It said that 74% of consumers age 64+ use e-mail on a regular basis which was 1% higher than teenagers. My initial reaction was “wow” I didn’t think email was dying that quickly with teens. Do teenagers really view email as “so last generation?” My research shows that the phone and not the PC has become the core technology device for younger generations and with it texting has replaced some emails but it still seemed odd. The Pew Internet & American Life Project noted the same observation, “At the same time, email has lost some ground among teens.” But the real story was that the headline captured a percent of a percent (online Seniors using email) and this can quite often lead to inaccurate conclusions – more Seniors use email than teenagers – 74% to 73%. The real numbers are actually that twice as many teens use email as Seniors – 67% to 33% - but that is not much of a headline. As the graph indicates Senior’s are still way behind in getting online. This should continue to change as Boomers age because they have already adapted and will continue to adopt the Internet.

Fastest growing age demographic on Facebook is women over 55

I was a bit surprised when I saw that the fastest growing age demographic on Facebook is women over 55. As I am frequently when I see headlines that don’t seem to fit what I see in real life. Think about the women you know who are over 55 years old. Are they Facebook users? I couldn’t think of any who were. So I did a little digging and found my answer. A segment can show huge growth by going from 1 to 100 even if that isn't many in comparison to the whole population which turned out to be the case here. The graph shows the population which is perfectly aligned with Generational Expectations. Younger generations have already adopted Facebook and I do think Facebook may be a great adaptive example as Boomers find it useful for finding and keeping in touch with old friends and family. (I plan a blog entry on this very soon.)

50% of Kindle users are 50+ in age

A colleague with a lot of experience in the connected home space, Ken Stampe, made a comment on my Consumer Research, Technology and Generations entry regarding three headlines that seem to fly against the Generational Expectations perspective and I thought it would be best to bring those into the main discussion.

I think I need to clarify a bit. My perspective is not so much about specific generations, but that there are phases through which consumers move. In other words, Gen Yer’s are moving into the early stages of their adaptation experiences. They may look at Twitter and see a tool they can adapt to better text groups of friends, for example. So even though we know that the baseline set for Gen Y’s or Millennial’s is very technologically savvy, they will not continue to remain as open to embracing new technologies and change in general as they have been.

50% of Kindle users are 50+ in age


I really like the idea of Kindle although I can’t justify buying one myself. I think, so far at least, it is a tiny niche product. Cool and interesting? Sure, but adoption is limited and Amazon has been very quiet about sales. The headline that Ken referenced is pretty limited in accuracy by the approach - taking demographic info based on postings. So I can’t really suggest that the numbers are accurate. However, I think the comments about the posting do shed some light that support my perspective. Just to cite a couple that supported the skew to older consumers, several pointed out the ability to increase the font size for readability. While some of the other comments, perhaps made by young consumers, suggest the iPhone or even laptop as better alternatives. I think today’s Kindle could be a great “adaptive” technology example. Older consumers with sufficient funds and increased book consumption might be the core segment. That is until we see a generation that has an innate experience with e-books in their grade school classrooms and it becomes an expectation that books are in electronic format.

An "Eating" Kitchen Design

As discussed in my Cooking vs. Eating entry, there is a generational shift occurring within the kitchen. I was recently discussing a pilot we conducted with the Internet Home Alliance in 2003 with a colleague and how badly we missed the kitchen of the future. The pilot had many elements and most were focused on bringing technology to the cooking process – making mom’s tasks easier through technology. One of the elements that seemed like a great concept was the ability to control a Whirlpool Polara range from your cell phone. You could access your oven from your cell phone and program it to cook dinner. The Polara had the capability to be both a refrigerator and an oven so you could put dinner in the unit in the morning and go off about your day. This seemed like a great idea. Families were time-stressed and this could give them flexibility based on their day for dinner time. We thought connecting the oven via cell phone was critical, after all cell phones were becoming ubiquitous. The results were underwhelming for that part of the pilot. What we missed was the idea that the kitchen was changing its role and not simply in need of a technology facelift.

The part we had missed was the evolution of the kitchen, and eating itself, as a social activity with an entertainment quality. Cooking was no longer about working to prepare the family dinner in isolation but more about chatting with friends while whipping-up something on which to munch or multi-tasking to help the kids with homework while getting dinner pulled together. I found a great “Future Kitchen” design concept by Electrolux that really hits these elements. Here is an illustration of the Rendez-Vouz. As described in a cnet article, “The Rendez-vous table is designed with the idea in mind that the kitchen is a social gathering spot of the house. Large and meant for multitasking, the table is conceptualized as a wide-open induction cooktop that also would be able to power other appliances wirelessly. (Like this blender.) While the social activity of cooking and eating is highlighted, the table also would be programmed with a virtual chef, enabling cooks of all skill levels to enjoy the meal preparation. The result is a new area of the kitchen, perfect for cooking, eating, entertaining, and socializing.” Electrolux made a point that the technology behind this concept is available today so these could be not-too-distant designs.

There are a range of industries that need to be developing these concepts and products. The Rendez-Vouz would change kitchen designs dramatically affecting large and small appliances and cabinets. It will be interesting to see if these new systems can be controlled via cell phone – somehow I doubt it.

Wednesday, May 20, 2009

Google's PowerMeter needs data!

Google's PowerMeter weaknesses are finally being examined. As I described in my earlier post, smart meter data is the critical success factor for any energy management system. Unfortunately, smart meters are nowhere near ubiquitous and will not be for many, many years. The United Kingdom just made news by setting a 2020 target for smart meter deployment in all homes. This target is considered quite bold. Google is now more publicly acknowledging the lack of smart meter data problem.

In an interview at the Green:Net Conference, Google's Tom Sly claimed that "best-case" PowerMeter would be ready by the end of this year however he also indicated that they were working with device manufacturers, "to produce something that can mimic a smart meter to work with PowerMeter and give the consumer enough data to help them modify their behavior." As I predicted, requiring consumers to purchase a device to "mimic a smart meter" will greatly reduce the adoption of PowerMeter.

As for the second approach, getting household data from utility companies directly, well that too looks problematic. Earth2tech.com's Katie Fehrenbacher reports that, "Some utilities have indicated to us that they’ve been uncomfortable with the fact that Google is building software and web tools for energy management and smart meters called PowerMeter. In their eyes, Google’s strong brand could dominate their relationship with the customer." I believe this understates the really feelings of most utility companies.

Tuesday, May 19, 2009

Google's knack for ruining business models

Google may be on the verge of ruining another business model. I have been in several meetings with companies struggling with the Google-effect on navigation and traffic. It is tough to compete with free. It appears they are preparing to do it yet again, this time in home energy management. Recently, Google announced and showed a few screenshots from a Google Labs application called PowerMeter. If you haven’t seen the screenshots, its function is to help consumer better manage their energy usage and, in the end, save money. In studies I have reviewed, most consumers will save from 5-10% simply by being made aware of their usage and making an effort to reduce. Another 15-30% of a reduction can be attained by more significant behavioral and structural changes such as weatherization and programmable thermostats. So the consumer benefit to PowerMeter is pretty clear.

Still, I was surprised to see the amount of positive press the relatively “meatless” announcement received. The reason for my surprise is that the critical element to the function of PowerMeter is the household energy data and although Google’s announcement indicated the participation of a few utility companies, widespread participation of energy companies is unlikely. My experience over the years with several energy providers is that they are not going to simply release the household data to anyone, even other departments in the same company and especially not Google. And if you can’t get the household data, then PowerMeter becomes useless. I did not find any of the reviews that pointed out this concern.

Are there other options outside the energy provider? Sure, there could be an inexpensive bridge from the meter to the internet. However, with the proliferation of different smart meters and various flavors of communication protocols a consumer purchased receiver seems complicated and unlikely. So what is Google thinking? Well, there may be method in Google’s madness – think smart grid net-neutrality where access to the data is regulated to be open and available to the consumer. In this scenario, consumers would have the right to monitor their own smart meter data even through a third party application. This seems entirely possible given that a great deal of tax-payer money is going to build the smart grid.

So what should an energy company do now? In the frequent advice of consultants before the Internet bubble burst, cannibalize or be eaten. The normally stodgy, regulated energy companies must think more like dot com companies. They must look at the entire energy spectrum and create a user friendly service that not only gives the consumer usage information but also helps them better manage their entire energy lifecycle. Energy companies can compete with Google. After all, they are the experts in energy consumption. Most energy companies can calculate the effects of replacing old appliances or refer consumers to reputable energy audit firms. Many of these services could be rolled into a monthly bill for easier affordability. There are a number of energy providers moving quickly to retain their customer relationships; Duke Energy, Florida Power & Light, and Austin Energy are shining examples. I am confident however, that many energy providers will not do so and I expect Google’s PowerMeter to be successful also. The time to build those customer service experiences is now.

Tuesday, May 12, 2009

Eating versus Cooking

One of the observations we made in defining Generational Expectations was the shift from cooking to eating. Although they accomplish the same outcome, they are very different perspectives. We observed the generational shift of predominantly moms, although this is changing as well, from Seniors' and older Boomers' view of cooking to feed their families to Gen X’s general lack of interest in cooking and increased reliance on restaurants and semi-prepared foods to Millennials' shifting view of eating as entertainment and a social experience.

The shift has fueled the explosion of restaurants and grocery aisle options and the coming effects will ripple through many industries. Kitchen designs, for example, will be questioned for the best use of space. Do I really need two ovens or a 30” range? How will Millennials redesign their kitchens to create an “eating out at home” social experience? Restaurants will need to view their business as part of a whole social relationship that includes, but is not limited to, eating a meal at a location. How will restaurants need to change to become better environments for friends and families to socialize and be entertained? The changes will be significant and faster than expected.

I was thrilled to see that someone gets it. Food Network has created a new channel called Food2. This new channel and online site is uniquely targeted at the 21-34 year old demographic. According to Food Network, they have observed an increase in their appeal to younger audiences. What I think is more interesting and insightful is that they conducted research and found that, consistent with our Generational Expectations observation, younger audiences want to experience food-related content in different ways. They found that, consistent with this generation’s baseline, they wanted shorter form non-linear content, more emphasis on experimental tastes and increased access to social and content sharing tools.

Food2 is described as "designed to be a social experience - just like food itself. It's the intersection of food, drink and pop culture." The announcement points to a heavy emphasis on integration with innate technologies, Facebook and Twitter, and featuring short videos with young culinary talent. They also launched original webisodes. Food2’s approach is “to live up to its goal of experiencing food through the eyes of Millennials.”

This a great example of a company recognizing a generational shift, researching it, and then designing an offering based on what they were told not what they thought they should offer. I wonder if the white goods, small appliance, restaurant, and packaged food companies are taking note of this shift. So far I haven’t seen any evidence they have moved from designing for my mother, maybe my wife but certainly not my daughter. What generation is your company listening to?

Wednesday, May 6, 2009

Consumer Research, Technology and Generations

My colleagues and I have defined an observation that we have made while conducting a significant amount of consumer research over the past decade. We have been calling it "Generational Expectations." It existed long before we named it and will continue, probably forever. Basically, it is the reason we adults fail to understand kids behaviors and lament that they don't appreciate what they have. We are all a product of when we were born. Two factors have changed dramatically and make it more important to understand the effects at this point in time, especially for consumer product and service companies. First, the speed of change around us has accelerated significantly. And second, technology has become pervasive and influences most areas of our lives. Consumer product and service companies must now launch and maintain offerings in a far more challenging market place.

We identified three stages of life that consumers past through. The first is when a generation moves through their formative years from toddler through teenager. We call these experiences ‘innate’ as they establish each generation’s technology baseline. In their early twenties their personal baseline has been created. This baseline sets what each generation expects as a minimum or expected experience. For Boomers it was TV and phone service however for Millennials it is cell phones and the Internet.

Generations beyond this formative period, early twenties through late forties, must adapt to the new technology, often relearning or changing a familiar behavior. We call these experiences ‘adaptive.’ During the adaptive period, consumers are looking for the connection between what they do today and how a new technology could help. They then adapt their old behavior or habit to the new technology. As you would expect, the adaptation process is much slower than the uptake during the innate phase. Boomers learning to use email instead of snail mail or texting in place of a phone call are examples.

From early fifties to death, consumers begin to resist change, especially from technology, often being suspicious of the changes. To the extent they can, this age group will try to prevent new technologies from impacting their lives. We call these experiences ‘resistive.’ To the degree possible, this age group is comfortable with what they have and how they do things. They have been through many adaptations and are ready to enjoy life as it is with less disruption.

The reason we separate the three experiences, innate, adaptive, and resistive is that they shape how consumers view and adopt products and services. Much of the often hyped coverage of the differences between seniors and Baby Boomers, Gen X’ers and Millennials is actually a result of the timing of technological influences on their respective lives.

Consumer facing companies must shape their research very differently to understand how generations in each phase perceive the offering. Most of the research today falls in the adaptive phase which for many companies is their core segment. It is important however, to understand for younger segments not the willingness to adapt but how it could fit in defining their baseline. Similarly, for older segments it is important to measure the strength of their resistance.

Tungle - Meetings made easy [well at least scheduling them]

If you work in a company that has some type of meeting scheduling capability and you meet predominantly with other people in that company, then Tungle is not for you. If on the other hand you are like me, setting up meetings with people from lots of different companies, then Tungle is a wonderful tool. Tungle has a plug-in for Outlook and works with Google Calendars to tap into your current appointments and availability. The magic in Tungle is that it stops the email string of, "when is each of you available?" and the back and forth that always seems to follow.

For example, I have an email suggesting a meeting with a partner and two other companies early next week. With the email selected I simply click on the Tungle button in Outlook and my Tungle page opens in my browser already populated with the email addresses from the original message. The Tungle page has my calendar with all my appointments. I simply add some info about the meeting, in this case a one hour conference call. I can how select windows of time that are available on my calendar. Then I send the Tungle invite. One nice thing is that my invitees do not need to sign-up for Tungle to respond for my meeting. They receive an email with a link to the meeting invite page and they select from the available times. The great news is that it is always up to date with the respondents availability so what you see is what is available based on everyone who has responded so far. If an invitee finds there are no available times that work they indicate that and the process begins again. Once the time is nailed down I can send the meeting notice with the details.

There is also a "Meet with me" capability that provides a personal link for someone to access to schedule a meeting with you. It shows your "busy" versus "available time based on your settings. I haven't found a need for this capability.

I use a Blackberry and can respond by opening the link but I would love to see a native app. Tungle is a free app that I highly recommend giving a try.

Thursday, April 30, 2009

App Store Mania has begun!

Much like the success of past technology related business model innovations like "Intel Inside" and Apple's iTunes/iPod, the noise around App Stores is about to be cranked all the way up. On the news of the one billionth app download, Apple has once again created the latest tech business tsunami. Having worked in the technology business for more than a decade I can only say, be ready, the App Store model will soon be appearing everywhere.

In a mere nine months, Apple has amassed over 35,000 apps. No secret here, if you have a good size market of customers and you allow relatively easy access to them, people will flock to you. Once again, Apple's genius here was to create an ecosystem whereby a virtuous cycle benefits them at every turn or more accurately transaction. Piper Jaffary's neutral case estimate is that Apple could generate $233 Million in revenue from the app store this calendar year. So does this mean I believe the Apple App Store is the only one that will be successful? Well, yes and definitely no.

First the easy "yes," for mobile phones everyone jumping on board now, yes you Microsoft and Blackberry are distant followers and will never come close. Apple's lead and inertia is simply too much. Juniper Research is forecasting mobile apps will reach $25 Million by 2014 and you can bet the pie chart will be dominated by Apple. The bad news for the other smart phone companies is that they must invest and launch App Stores anyhow, it has become an expectation. I don't believe the top smart phones can avoid giving their customers something that hopefully slows any migration.

Now the "definitely no," I think the opportunity here is for other services to look at their business models and evaluate how an App Store might fit. The key elements for creating that virtuous cycle are a large consumer base and a technology platform that enables third parties to easily develop interesting applications while providing drop-dead easy consumer transactions. The business model impacts are pretty straight forward create more customers, retain them longer and collect a new, small toll for each transaction.

A clear opportunity in my perspective is the cable industry. An industry that lives in fear of the Internet and everything online should embrace this model quickly. Unfortunately, the mentality and history of the industry is one of complete control and prohibitive of outsider's access to their customers. The roll out of tru2way set top boxes can create the technology platform required for a rich app experience but I believe the technology platform is the least of the challenges. I predict that the major cable companies will resist the App Store concept until they begin to experience noticeable revenue declines from the cable cord-cutters, households doing the unthinkable only a couple years ago - unsubscribing to their programming provider and getting all their content either over-air or online.

There are signs of the growing storm. At CES earlier this year, Yahoo and Intel were demonstrating their "widgets" for the TV. Samsung was showing Netflix On Demand and Control4 home automation software integrated into their TVs. Boxee, a CES award winner that aggregates online content based on your social network, is launching and app dev challenge. Hulu, in addition to their Super Bowl ads, has recently received an investment from Disney and is gaining eyeballs. The slower than hoped for adoption of Blue Ray players is spurring manufacturers like Samsung to expand the device's functionality to a content portal. Instat reports that the under-35 adult population in the US has already adopted Web-to-TV video capability with over 40% viewing Web-to-TV content at least once a month. Further, Instat predicts that within five years, the number of US broadband households viewing will grow to 24 million. Clearly there are clouds on the horizon.

Stay tuned, I will examine a few cable App Store opportunities in a future entry.

Wednesday, April 29, 2009

Welcome, let's get started...

This blog has been a long time coming. I hope to use this forum to create a journal and open a dialog about how connected technologies are changing our lives. I want to capture and force myself to expand my frequent fleeting thoughts about business opportunities that should be explored or avoided. I also hope this someday grows into a dialog because I truly believe that we is smarter than I. It has been hard to start and I have found so many ways to start without actually starting. So this is it, my first post and now I’ve begun. Thanks for a slice of your attention.

You can get a lot more of my background here: Resume