whales plankton and the launch of openwaspa

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After some initial teething troubles, we have finally relaunched Openwaspa

The concept of OpenWaspa was first mooted by us in OpenGardens

OpenWaspa is a showcase for innovative applications. Some of this outline is still ‘work in progress’ – hence we seek thoughts.

We address some key issues(as below) which emerging companies in this sector face.

We are addressing four problems

a) Lack of channels to market

b) Exposure to the ‘powers that be’ – mainly mobile operators

c) the ‘broken value chain’ and

d) interconnectedness – cross industry exposure

From the problems listed above, (a) and (b) are related in the sense that the operator is the best channel to market but also the most difficult to approach for the small developers.

Similarly, (c) and (d) are related.

We believe that the mobile data value chain is broken because of the ‘whales and plankton’ concept. In a nutshell – get rid of the middlemen! The industry depends on ‘intermediaries in the value chain getting a % of the revenue’. For example – in mobile games, we have the mobile aggregators, wireless service providers and so on. This model is fine in already established value chains but is no good when you have an emerging industry.

There is hardly any money for the innovator i.e. creator of the new service in a new service. What little revenue the new application gets – is promptly gobbled by the middlemen. Thus, taking a marine biology example – if the plankton die(the garage developers) – the whales die as well (i.e. the whole industry suffers). There is a related problem looking at it from the mobile operator. They simply have too many people knocking at their doors. While it seems that no one is interested in new/innovative applications – our research shows that’s not the case.

This is where the openwaspa (Open Wireless service provider association) program comes in. The idea is very simple – provide a ‘showcase’ for new applications. Don’t bother about trying to ‘restrict’ the access to the final developer. Anyone can look at the application and then contact the developer direct and do a direct deal. Thus, there is no incremental revenue share.

The operators like it since it provides a structured way to access new innovation. We will also ‘evangelise’ the application where we can.

Interconnectedness

Finally, there is the issue of interconnectedness. As mobility advances, there is the question of a lack of a ‘one stop shop’/ People developing video applications, TV applications, games etc need access to cross industry contacts and knowledge. we intend to provide that.

We see this site as ‘work in progress’ In it’s ultimate vision, we may evolve to a web services interface/common contracts for mulltiple channels to market and so on. But for now, its a ‘showcase for innovative applications’

Hopefully it will evolve over time.

Image acknowledgements:

whale: http://www.wdcs.org/dan/publishing.nsf/allweb/BC8357971AA88F2580256C46003543B6

Plankton:

http://www.biosci.ohiou.edu/faculty/currie/ocean/

template to assess demand of a new service..

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I use this example often when trying to assess the size of the market opportunity. It often comes back with a sobering picture. You would have to modify this methodology to suit your own application but the basic steps are the same – i.e. think in terms of concentric circles.

Start with the largest population base and work inwards. Some of these stats are not easy to obtain(for example – the population of a country may be easy to find but not the percentage of handsets supporting J2ME in that country). In that case, if you are really serious, I recommend you actually buy some of these stats from research companies. On the long run, they may save you more money!

A sample set of steps I use is as below

a) What is the population of the country?

b) What is the percentage of handset penetration amongst this population

c) Which operators are you targeting within this population?

d) Which handsets are you targeting within this population?

e) What is the technology of deployment for example Java, SMS, WAP etc?

f) Does the application have any special technology needs such as location-based services? How many people have handsets equipped with this technology?

g) What does a segmentation analysis of the subset reveal?(simplest segmentation is male/female. Prepay/postpay etc)

h) What are the distribution channels to market for the segments we are targeting?

i) What proportion of this subset do we expect to hit and convert to customers based on our marketing budget?(i.e. our marketing dollars)

This will give you your target audience.

Thus, your target audience subset times number of potential downloads per month should give you an idea of your monthly revenue. This could then be tied against your cost base including your development costs, porting costs etc to arrive at a more tangible picture of success/failure of the new service.

source: www.opengardens.futuretext.com. All other sources as indicated

Show me the money!

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If weblogs have a patron saint, I guess the patron saint of this blog would be Jerry Maguire – with his trademark phrase – ‘Show me the money’

Having spent a lot of time trying to understand how to ‘sell’ mobile applications(wireless applications) – I keep being reminded of this phrase often

Selling a mobile application is not an easy task and requires an understanding of multiple disciplines – technology/sales/channels to market and so on.

Its often possible to ‘sell a mobile application’ but make little money!Here is an example -

Consider mobile gaming – a ‘hot topic’. How many game downloads would it need to attain a profit?

The Mobile game industry is similar to the PC or console game market. Traditionally sales are heavily skewed to the top ten titles, and in many cases the top five take a huge portion of the entire market. Most titles lose money. Net margins for Mobile operator and aggregator distribution models (for example using aggregators like Cellmania, Mforma etc) run from 60% to 75% in the USA. In other markets, it could be worse (for example India), or better (for example Japan and Korea).

In the USA, a game typically retails at $3.99 (for an ‘over the air/OTA’) delivery. Product development costs for a single player game title could range up to $40K including handset testing and porting (but that could get a lot cheaper if developed overseas). Assuming a net of $2 after all costs, we need sales of 20,000 units just to break even. This gets even worse because many successful titles depend on a brand – for example a ‘Harry Potter’ game. Brands have their own costs leaving even less for the developer.

Does that mean there is no money in this field?

Although mobile games themselves are saturated, there is money in variants ..

3D gaming(technology variant), multiplayer gaming(communities), games for women(subsector of the audience)

In a nutshell, the ‘obvious’ approach would be to create a game single player game (just because there are so many of them) .. but it may not be the most profitable (and our patron saint would frown on it!)

Example source: OpenGardens

Movie : Jerry Maguire : 1996

Beatles to BT? would it work?

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On a day when Liverpool is celebrating, I thought that this would be a good topic to start my blog on.

Would ‘Beatles to BT’ work? i.e. If the Beatles had been starting out – would they have approached BT to sell their music? What would happen if they did? Would there be a Beatles – in the first place?

Yet, why do we see so many new content providers attempt to sell their content via the Mobile Network Operator?

There is a view that Mobile Network Operators should fund emerging content companies/creative media companies developing content for mobile phones. Indeed any investment in this industry is good and the idea thus has some merit.

But .. I still think .. Beatles to BT would produce a flat,corporate ‘anthem’ rather than a vibrant, rich symphony

Here are the reasons why

a) Operators can’t know what to fund. How do they decide what will be a hit? Even record labels/movie companies struggle to spot the next ‘Kylie’. Why should Operators(often engineers like me) go ‘kylie spotting’? Why should they enter an area which is clearly out of their realm of expertise?

b) Operators don’t know what to fund(which is different from (a)). Its not an area of expertise

c) Operators may have a lot of cash – but expect hard times ahead. More on this in subsequent posts. Thus, I would not expect Operators to be cash rich for long

d) Running a Mobile network is a business – not a charity. The Operator is in the business of making money – not in altruistic pursuits. Any form of ‘grant’ to emerging companies leads to a dependent companies. Such companies are rarely creative and rarely break free from the mother ship

e) Many operators already have venture funds. These have been only modestly successful and infact – largely unsuccessful.

f) There have been instances of ‘mobile only brands’ created by non operators. This week, the crazy frog overtook coldplay for the top stop. Granted, that the ‘frog’ has had massive TV publicity in the UK. Even then, it’s no operator brand. This means, a creative brand CAN be developed without backing from an operator.

So, what’s the right thing to do? I don’t pretend to know all the answers but one suggestion is to ‘create a viable ecosystem’ i.e. create an ecosystem where a thousand flowers bloom. No one knows which one will succeed but at least they need a fertile plot of land. This means doing less. Making technology cheaper. Making partnerships easier to set up. Picking up the ‘Amazon’ model of being a ‘marketplace’(which is not the same as a ‘pipe’)

The phrase ‘Beatles to BT’ was used by Tom Weiss in the OpenGardens meeting on May 19.