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