TiECon 2010 Wireless Sessions: Mobile Apps and Advertising

Abstract:

In this second TiECon 2010 article, we review the two other Wireless panel sessions that covered a variety of topics very germane to the mobile consumer market. The main themes were: mobile apps, mobile advertising, metrics to measure usage, Location Based Services (LBS), and the real time web. We report on thesse and related issues, but not the self promotion pitches made by a few of the speakers. These two TiECon 2010 wireless sessions were:

  • Wireless: Audience Engagement and Metrics in Mobile – Leveraging Mobile Apps, Metrics and Targeting to Drive Value
  • Mobile Consumer and Enterprise Applications – Leveraging the Power of LBS and Real Time Web

We then provide our own perspective on the key issues discussed.

1. Wireless: Audience Engagement and Metrics in Mobile – Leveraging Mobile Apps, Metrics and Targeting to Drive Value

Session Description (from TiE):

Mobile apps provide many usage data points that are generally not available on other online or mobile web channels. Most online players are launching mobile app versions of their online properties, measurements and analytics from apps need to be integrated across both online and all mobile channels to derive an integrated view of the publisher’s audience. Furthermore, the "short-term information seeking" consumption mode of mobile apps implies that any information/metrics that are available must be leveraged in combination with location and other contextual information to target/personalize offers and content to drive engagement and monetization. This panel will highlight usage data points are available and focus on how they can be used to enable richer advertising, content experiences and commerce. Attendees can expect a robust discussion around – What is the state of play in terms of getting the analytics/insights from mobile apps, who are the players and what are the opportunities? What is the state of metrics for mobile advertising in the app space? How relevant are desktop metrics in the mobile apps context? What makes mobile apps unique and how should metrics be defined to capture this unique value? What new metrics must be defined to quantify ROI for advertisers in the mobile app context? What’s working vs not in the mobile app analytics world today? How will mobile app analytics be integrated with online analytics to drive improved ROI for mobile advertising? What is the state of the art in mobile behavioral targeting and personalization? How is mobile analytics being leveraged to improve engagement and user experience in mobile apps?

Moderator: Michael Bayle, VP, Amobee

Panelist(s):

  • Kanishka Agarwal, SVP Global Mobile Media & Marketing, The Nielsen Company
  • Nancy Benovich Gilby, VP of Engineering, Asurion Mobile Applications
  • Ilja Laurs, Founder & CEO, GetJar
  • Eric Littman, Chairman & CEO, Medialets

Session Summary:

Editors Note: Unlike the first Power Connect Wireless panel that was subject of our earlier TiECON 2010 article, there were no questions debated by the panel members (we much prefer that format). So we are reporting the essence of each of those short presentations here.

In his opening remarks, Session Moderator Michael Bayle described the "mobile opportunity" as apps for smart phones and mobile advertising. He said that "smart phone sales will overtake feature phone sales in 2011 and mobile ad spending willk reach $1.5B in 2013." Continuing, Michael said, "Prior to the iPhone, content creators had to build time consuming and expensive (software development) platforms that had to be approved by the mobile operators. The iPhone and app stores changed that model and created a "nicer" walled garden." In other words, there is more openess now than before, but operators still control what devices are sold on their networks and have a say as to which applications might be blocked or not allowed. The discussions that followed were based on brief presentations from the panelists.

Mobile advertising is very different from typical on-line (fixed access) advertising, according to Eric Littman. Standard display ads on a PC generally won't work on the much smaller mobile device screen. Instead, advertisers need to craft rich media ads that are specifically designed for mobile handsets. His start-up company (Medialets) provides "core ad technology" and analytics to publishers, like CNN, NY Times, and Fandango. "Mobile ads are cool," quipped Mr. Littman (as if he were talking to an audience of teenagers and twenty somthings). He then offered several key observations:

  • Operator deals are expensive and take a very long time to complete. Don't underestimate the depth of the relationship you need to build with the carrier.
  • Consumer titles are "hit driven." Only a few mobile apps become widely used.
  • Opportunities are in service plays and product line extensions for mobile operators. Examples are authentication, integrated payments and billing that are "leveraged as a service."
  • Re-invention plays vs novel business models should be considered by the developer who needs to move very quickly to succeed.

Kanishka Agarwal said that his company – Nielsen- was the world's largest ressearch company tracking consumers (everyone knows about the "Nielsen ratings" for TV shows). They are tracking what mobile consumers are actually doing. Mr. Agarwal noted that Android apps and app stores are doing just as well as Apple's equivalents. In the U.S. today, 21% of devices are smart phones. But that will grow to 50% by 2011 (I wasn't aware that Nielsen made market forecasts). Here are the percentage of mobile subscribers that use various applications:

  • Games 65%
  • News/Weather 56%
  • Maps/Navigation/Search 55%
  • Social Networking 54%
  • Music/Pandora 46%

"To be cool, you need to start using Pandora and Facebook on your mobile phone," according to Kanishka. He close his presentation by advising the attendees to "Start playing with non-productivity apps on an iPhone or Droid. It's actually a lot of fun," he said. (For sure, this author will never become "cool").

Ilja Laurs said that GetJar was the second largest app store/ distributor with 5B mobile app downloads projected by the end of 2010 (GetJar which has partnered with Facebook, says its own app has been downloaded from the Facebook web site, 50 million times in just six months). In many countries, the mobile phone is the only way users access the Internet (as they don't own a PC). This represents a huge opportunity for app developers. Four mobile application business models were quickly identified by Mr. Laurs: paid up, free with advertising, virtual goods, cross selling/upselling. However, none of these were explained or compared.

Nancy Benovich Gilby discussed the problems of monetizing apps and chosing a software platform that will enable the developer to do so. She stated that, "It is very difficult to find the right combination of mobile data services that work" (presumably, for the both the developer and consumer). Her company -Asurion Mobile Applications – provides mobile data backup and insurance protection against lost or stolen phones. They partner with U.S. Cellular. The company's web site states a very clear vision: "To provide automatic mobile protection, seamless content access and enhanced social/ business interactivity through the device."

Nancy identified THE key challenge for mobile app and service developers, "How to determine the business model for a given service so the developer and provider can monetize it?" She said that "added value reduces churn." One option is to sell a service as a "white label" through the mobile operator. She then asked a very germane question, "How does a developer chose which mobile OS/ software platform to create apps?" Nancy suggested tthe developer should first look at "hard data that shows where the real opportunities are." (But she didn't say where to find such data or what to look for). "First you need to determine your goal," she said. Here are a few example goals mentioned: scale, monetization, "cool" factor. She advised developers to start by looking at mobile access to Yahoo, Google, and Facebook. Measure the audiences breadth and user experiences which will depend on the country. For example, in the U.S. 20% of mobiles are smart phones, but in India there are no smart phones and mostly all mobile data is via SMS.

Rather than a wrap up or summary, the moderator than moved directly to the Q and A session, at which time this author left.

Assessment: We were hoping to hear about mobile enterprise applications, M2M wireless communications market and the "Internet of Things," but those topics were not addressed in this session. There was also nothing on new business models between content providers and wireless providers (e.g. Amazon eReader downloads don't incur a separate wireless bill from the 3G network operator). Needless to say, we were disappointed.

2. Mobile Consumer and Enterprise Applications – Leveraging the Power of LBS and Real Time Web

Session Description (from TiE):

The discussion will be centered around certain key features and capabilities available on most new mobile devices – LBS & Real Time Web, and how it is revolutionizing a new class of applications being adopted by both Consumers and Enterprise alike. This panel will discuss technologies, capabilities, trends and what innovative developers can do to accelerate adoption of their applications.

– Real-time Collaboration as a key driver. A recent study highlighted the relatively low percentage of location applications across an array of popular mobile operating systems, particularly the share of premium vs. free apps. At the same time, the total number of location applications is somewhat staggering in that some 6,000+ location based or location aware apps are available today. The next obvious question is why aren’t more people using location apps outside of basic maps, directions and the occasional store locater? Is the technology ripe enough or are there still improvements to be made in accuracy, reliability or privacy? Are there significant growth and revenue opportunities for location in games, social, and advertising segments?

The Enterprise market is another potentially valuable segment for location. Applications like Field Service, Direct Store Delivery, Public Safety or Security and Asset Management are obvious examples that benefit from location. Will this trend extend to broader enterprise application areas like SFA, Customer Service, Collaboration, etc. all becoming more location-aware.

Given that Operators released and promoted some of the first and to date, most successful location apps, how important of a role will they play in the LBS ecosystem as a greater number of applications proliferate their networks? This panel will discuss and debate the relevance of location and the benefit for Enterprise apps in wireless and where they see the next big opportunity.

Moderator: Jai Jaisimha, CEO and Founder, Open Mobile

Panelist(s):

  • Atul Suklikar, VP of Product Management, Salesforce.com
  • Bob Borchers, General Partner, Opus Capital
  • Leslie Percutti, Director of Product Management, Qualcomm CDMA Technologies
  • Willie Jow, VP of Mobility Product Marketing, Sybase
  • Ray Taylor, President, Buongiorno USA

Session Summary:

We only caught a glimpse of this session which was properly organized as a panel with the moderator posing questions to the panelists who then responded. Here are a few key points made about LBS and enterprise apps (for various vertical market segments):

  • Location and proximity offer good potential for CRM based enterprise applications, e.g. to enable a company to "see" nearby customers, say within a 25 mile radius
  • Location infrastructure (which determines preciseness of the user location) may not be good enough to build high quality apps. It may also not be reliable enough.
  • Carriers don't know how to monetize LBS.
  • There will be new, emerging mobile apps for the "light weight information worker." These may include social networking to enable such workers to collaborate.
  • Companies need to do more to motivate developers to create apps for enterprise users.
  • Developer needs to build and deliver apps that provide a great user experience. The goal is to build "high touch" apps
  • Challenge is that the mobile enterprise market is too fragmented to build apps on the different platforms and devices currently in use.

Assessment: While a lot of the very important issues were brought out in the open by the panelists, there were no tangible take-aways for me. The answers provided were very general and lacked sufficient detail. I think it will be very difficult to encourage independent app developers to build LBS applications for specific industries, unless they get contracts and up front payments to do so. They are not going to be selling those through app stores, but to each individual company in a given industry. We were also disappointed in this session, especially when compared to the first Power Connect Wireless Session and TiECon 2009 Wireless sessions.

For comparison, please see this article which had 11 user comments: Mobility in the Spotlight at TiEcon 2009 Wireless Sessions

New apps and smart phones to drive demand for 4G mobile networks

We now believe that smart phones and "all-in-one" gadgets will drive the need for more bandwidth and QOS and accelerate mobile network movement to 3.5G (EVDO, HSPA, mobile WiMAX, etc) and 4G (LTE and Advanced WiMAX- IEEE 802.16m).

UK research firm Mobile Squared reports that Apple to hit 1 billion app downloads on April 23rd!  Please see:

http://www.mobilesquared.co.uk/?p=593

They observe that the number of downloads from App Stores is growing exponentially: Apple is now experiencing average daily downloads of 5.1 million apps and requires another 38 million apps to reach 1 billion. At this download rate, the billion mark will be surpassed in a few days. At the start of December Apple announced that it has passed the 200 million download mark. And this was promptly followed by a similar announcement of 500 million downloads by January 19th.

We would expect to see the same growth from other smart phone and "all-in-one" gadget makers (e.g. RIM, Palm, Nokia, etc) who have started their own on-line app stores.

Many of the new apps will require massive amounts of bandwidth, e.g. video sharing, multi-media conferencing, interactive games, Video on Demand, real time broadcast video, Location Based Services, etc. The amount of bandwidth and real time, rich media content demanded by smart phone users will necessitate the need for new mobile networks with higher bandwidth and QOS.

And it appears that more powerful iPhones are just around the corner.  The San Jose Mercury reports: Speculation grows over new Apple products

"Kaufman Bros. analyst Shaw Wu, in a recent note to investors, wrote that Apple could be ready to release a new iPhone packed with a powerful application processor to run more complex software. And Wu anticipates improvements to the device’s battery, which does not last much more than a day during heavy use."

http://www.mercurynews.com/businessheadlines/ci_12167258?nclick_check=1

and here is more proof:

Apple’s App Store: a rapidly growing marketplace

http://www.mercurynews.com/ci_12037710?IADID=Search-www.mercurynews.com-www.mercurynews.com

Implications::

The big problem for network operators is that bandwidth and need for QOS is exploding, while revenues are increasing at a much slower rate. Hence, revenue producing services must be developed and come to market quickly for operators to get a decent ROI on their investments in next generation mobile broadband networks.

Smart phones and all in one gadgets will likely dominate the 4G mobile hand held market (that does not include netbooks and tablet PCs). We see little room for MIDs that do not have voice, conferencing or LBS capability.  The functions envisioned for MIDs will likely be built into smart phones and multi-purpose gadgets (e.g. web based cameras).

Perhaps, the notebook and netbook PC user will be content with nomadic/ portable Internet access and related services (either from WiFi hot spots or WiMAX with USB dongles). The exception is Internet access in high speed trains, e.g. in Japan and Taiwan. In those cases, mobile WiMAX networks are being planned for notebook and netbook users.

IEEE ComSoc-SCV Workshop: Location Based Technologies and Services

Summary of Location Based Technologies and Services Workshop

[June 19, 2008, Crown Plaza Hotel, San Francisco International Airport] 

Alan J. Weissberger
IEEE ComSoc- SCV Secretary and Program Chair
Backgrounder:  
Yankee Group tele-briefing report on Location Based Services and Technologies:

Speaker Remarks
1. Dave Reid, Director of Business Development, SiRF Technology Inc. http://sirf.com/
 
The world is on the go (which implies that mobile telecom services and devices will grow rapidly). SiRF believes that location awareness brings convenience to our lives. SiRF is predominantly a (fabless) semiconductor company- with the largest market share of discrete GPS chips and related intellectual property. SiRF powered mobile devices include personal navigation devices (PNDs), handheld GPS receivers, smart phones, feature phones, personal media players (PMPs), and in-dash car navigation systems. 
 
There are many types of Location Based Services (LBS’s) being deployed and being considered by network operators: navigation, social networking, location based advertising, mobile commerce, transportation, child locator, pet tracker, etc. New mobile broadband networks, like WiMAX, will be location enabled; so will new devices, including Mobile Internet Devices (MIDs) and even location aware watches. Applications and content are intersecting and this will lead to innovative new mobile services with location awareness. Enterprise customers have led applications in location for a long time, but the consumer market for LBS could now be poised for faster growth.
 
Verizon Navigator (offered by VZ Wireless) is the most popular LBS and most successful navigation service in the world (5M subs). VZ Navigator offers audible turn-by-turn directions for $10 per month.
 
 
LBS’s (mostly navigation) will continue to command a pricing premium over other wireless add-on services, e.g. music, ring tone, games.   In the future, LBS will be a key revenue generator for network operators. Nokia announced they would have location awareness in all their devices (Nokia uses TI processors). 
 
Location Based Technologies: While GPS is only one of several location-based technologies (others include cell site location, broadcast TV signals, WiFi AP locations, RF signatures- see graphic below), its accuracy is better than the others. Assisted GPS may be used to enhance performance when signal propagation conditions are poor (e.g. when surrounded by tall buildings or when the satellite signals are weakened by being indoors or under trees). In pure GPS location tracking, it typically takes 30 or 40 seconds for a GPS device to compute a location if it does not have recent ephemeris data for the GPS satellite network. Otherwise, locations are computed once a second or faster. 
 
Sky Hook Wireless (http://www.skyhookwireless.com/) creates a database of WiFi Access Points (APs) as the basis of its WiFi Positioning System. It uses the native IEEE 802.11 radio (already on mobile devices) to deliver accurate positioning worldwide.
 
Dave Reid was kind enough to provide this chart of Location Tracking Technologies:
 Location Tracking Technologies
Notes:
RSSI = Received Signal Strength Indicator
 
TDOA = Time Difference of Arrival
 
Cell ID will assume location is in the midpoint of the cell (this could be inaccurate if person is at the cell edge or on the border of adjacent cell?)
 
SiRF has proposed a LBS Systems Architecture. They have an ecosystem in place to develop, test and market location based applications. SiRF provides end- to- end solutions and has engaged in partnerships with various companies.
 

 
2. Jon Metzler, Director of Strategic Initiatives, Rosum Corp. http://www.rosum.com/
 
Location determination capability is becoming a "table stakes" requirement for device makers and semiconductor companies. LBS’s should be considered as a utility – like electricity that can be turned on and off. 
Rosum is the first and only company to harness over the air, broadcast TV signals for position location. The key advantage of this approach is that TV frequencies were designed to penetrate walls, ceilings and trees, in order to deliver a good video signal indoors. The company was founded by original GPS architects to deliver always-on location awareness where GPS fails – indoors and in urban canyons. Rosum is a provider of location, timing and frequency calibration solutions for Mobile TV Device and Home Telecommunications markets. In particular:
 
  • Mobile TV Devices: cell phones, notebook PCs, and PND/PMPs equipped with TV tuners
  • Home Telecommunications: femto cells for the home, and E911 (E112) for Wireless and VoIP subscribers
  • Among recent milestones for the company:
    • Rosum Announces Successful DVB-H Positioning Trial with UK’s National Grid Wireless (6/25/08)
    • 2Wire Selects Rosum TV+GPS Location and Timing Solution for E911/ Home Telecom products using femtocells (3/31/08)
  • Rosum Signs Collaboration Agreement with Intel – Will Enable TV-Location on Mobile Devices (10/07)
But why use Broadcast TV signals for position location? 
 
The TV signals offer high power (1 MW ERP typical), low frequency (50-750 MHz), frequency diversity (wide 6 to 8 MHz channels, multiple channels per tower), and horizontal signals (less attenuation from roofs and walls). Moreover, the terrestrial TV infrastructure is highly correlated with population density and broadband penetration in the U.S.   In a one on one test of TV Positioning vs. GPS based location tracking, GPS failed at three of six indoor locations in the SF Bay Area.
Editors Note: GPS vendors, such as SiRF and others, would likely question those test results.  However, Rosum uses third party testing in order to address concerns of competing technology vendors.
 
The best of both worlds might be a hybrid approach – where GPS and TV based positioning are combined in one device. In that case, GPS would be used outdoors, while TV positioning would be used indoors and in canyons (where GPS often fails).
 
The location technology and device market is consolidating, with many mergers and acquisition of key players, e.g. Nokia acquiring mapmaker Navteq. Other market themes of note:
  • Online mapping arms race between Google, Microsoft, Yahoo
  • Combination Personal Navigation Device / Portable Media Players (PND / PMPs)
  • Convergence of PNDs and Communications devices (i.e., cell phones) 
Two popular hand held devices with LBS and positioning technology:
  • Blackberry with Google Maps and GPS positioning
  • Apple iPOD Touch with Google Maps and 802.11x (WiFi) based positioning
What Comes Next for LBS’s?
  • Connected (not silo’d) use of location information with two categories foreseen:
    • Groups: self-chosen affiliations, such as Social Networks
    • Swarms: (anonymous) use of location for ITS enhancements
  • Resolution of privacy issues (TBD)
  • Growth in new LBS’s such as: Social Networks, Intelligent Transportation Systems (ITS), Connected Navigation, and Local Search/ Advertising (Google and Yahoo)
 Panel Session
 
The author chaired a panel session with the two speakers. It consisted of a few pre-planned questions for discussion, audience Q and A, and a wrap up question about the nature of future devices for LBS’s (cell phones, iPODs, other gadgets, or Mobile Internet Devices=MIDs). The panelists agreed that the big software companies (including Microsoft, Yahoo, Google, Oracle) all had LBS initiatives underway. They also believed that the smart phone (cell phone + Internet + LB technology) would dominate the LBS market, especially over non-voice capable MIDs.
 
Jon later amended his panel session remarks regarding MIDs: "If you define MIDs as including devices with integrated WiFi, such as the mylo or iPod Touch, then yes, I believe that market will develop. With that said the overall cell phone market will still remain much larger."
 
The author thanked the panelists and the audience (35 attendees) for their participation in this very enlightening and informative workshop. We also thanked IEEE SECON for sponsoring the workshop in conjunction with their annual conference.

Addendum: Critical issues for mobile network operators
 
At a VoiceCon- Spring 2008 panel on LBS’s, the critical issues for mobile network operators were identified:
  • Security and privacy-authentication, authorization, encryption, etc.
  • Application integrity – to prevent apps from harming network or users
  • Power dissipation and utilization
  • Flexibility and customizability
  • Integration of new value added services (e.g. location)
  • Billing: What to charge for a new service? Flat rate vs. Usage based (metered)
Postscript: Location Based Social Networking from Verizon Wireless
 
On June 26, 2008, Verizon Wireless announced that its location based social networking service- known as loopt – is now available to its subscribers. The original announcement this past March anticipated an April launch for the service, but according to Verizon Wireless spokesman Jeffrey Nelson, “technical issues, pricing issues and running the application through some traps before launch,” caused the delay. Regarding security and privacy, Nelson said: "We’ve strengthened the privacy capabilities even further. We will be pinging customers on a regular basis to let them know their loopt account is active and that they can be tracked."
 
Loopt’s CEO Sam Altman had previously stated that privacy had been one of the biggest issues facing the uptake of location-based mobile social networking and that solving them is a key step toward achieving inter-carrier LBS services.   Evidently privacy is no longer a problem- at least not for Verizon Wireless.

Market for Location Based Services and Technologies

Note:  IEEE ComSoc SCV had a great workshop on this topic June 19th at the SFO Crown Plaza Hotel.  The workshop summary report appears elsewhere on viodi.com. 

 
The following notes are a transcription from a Yankee Group LBS telebriefing I attended June 12, 2008:
 
Location Based Services (LBS):  The Final Destination

Navigation is a great first stop for location based services
– Highly compelling with a wide audience reach
– Consumers are willing to pay $10 per month
• Navigation prices will have to come down, and thus, margins
– Competition is heating up with new market entrants
– Low-cost alternatives are available
• Location information will enhance a wide variety of mobile internet applications
– Value added content for apps from community to transportation
Navigation is the only application on the horizon that warrants charging any more than an extra $1 or $2 per month
– Don’t fulfill a substantial need
– Don’t have a broad addressable market
– More ecosystem participation is needed to facilitate apps beyond navigation
LBS is not a subscription-based money maker for mobile operators but there will be financial opportunities through advertising, etc. that will be lucrative across the value chain
The Perfect LBS Storm of Events (a checklist)
• Mobile operators put marketing muscle behind LBS
– Wow…consumers will pay $10 a month???!$%$#%$#%$
• Handset vendors commit to LBS
– GPS is no longer just for CDMA
• Application providers rush to design cool apps
– Oink!
• Consumers embrace real-time local information
– Garmin has shown the way
• Content providers and local businesses want to widen their reach
– Does anyone sell gas for under $4 anymore???
• GPS is not the only answer to location information
– Triangulation, WiFi, and good ole’ zip code entry
 
The $10 Navigation Price Point Is Not Sustainable
The $10 monthly standalone subscription price of navigation will drop by 2009 at the latest
– Inexpensive entry-level PNDs
– The entrance of AT&T and T-mobile, Google and Yahoo, Samsung and LG
– Low-cost alternatives, such as the $99 Garmin Mobile XT
– Nuviphone and other navigation-optimized devices
– Complex value chain
• Nokia/NAVTEQ, TomTom/TeleAtlas, Google, Medio, who else?…
• Mobile operators must allow consumers to “snack” on location
– Daily, weekly, monthly? ($2/day, $4/week, $10/month)
• A lower price will kill the margins for the operator
– Has to share with the app provider, mapping data provider, content provider, infrastructure vendor, etc.
The bundle is coming
– Sprint Power Vision Navigation Pack for $20, Simply Everything for $99
– Partial ad subsidies: click to call, premium listings
Navigation is first successful application of LBS, but additional services are poised for mainstream adoption
 
•Transportation (traffic recognition, parking space finder)
 
•Community (dating, social networking, friend & family finder, photo geo-tagging)
 
•Local search (local POI, reviews,events, weather)
 
•Mobile commerce (shopping & product finder, real estate listing)
 
•Mobile marketing (coupons)
 
Location will enhance where, how and why consumers use their phones
  • Communications (tracking people and places)
  • Commerce
  • Marketing and couponing
Though LBS possibilities are many, few companies are capable and ready to integrate real time interactivity

• Companies with systems capable of utilizing location are much further along in the implementation cycle than companies with inadequate internal systems
• But even among those companies who’s systems are capable, less than half have implemented or are in the process of implementing mobile coupon and marketing
programs
• This is significant because outside of simple navigation, most LBS applications share significant network effects
 
The above conclusions were documented in a Yankee Group Survey which asked:
Are your internal systems capable of utilizing location & real time interactivity?
312 respondents were split into 3 groups:
-We don’t know what’s required, 36.5%
-Our systems are not capable, 26.6%
-Yes, we are capable,  36.8%