Pre-Conference Workshop

Combating the entry of Apple into the mobile market through apps, and the importance of managed services in maintaining the competitive edge

Introductions

• Kenneth Plunk – CEO KPI Consulting-KPI Consulting started 8 years ago and has

been focused on the telecommunications carriers and mobile developer since that time. We work with the top mobile carriers worldwide and currently run the web infrastructure for many of them. We are hardly a recognized brand to consumers, because we believe that carriers are the one that need to be recognized by the developer community.

Agenda

• 8:30 - Registration and refreshments• 9:00 – Introductions• 9:15 – Competing in an alien world (Break into groups)

– Adapting the business model to operate successfully against alien competitors, such as Apple

– Preventing the relegation of operators to ‘bit pipe’ status through apps ownership

• 11:00 – Networking break and refreshments• 11:30 – Using applications to increase revenue

– Becoming an apps portal to maximize ARPU and differentiate brand– The importance of a quick time to market

• 13:00 - LUNCH

Agenda Continued

• 14:00 – Developing the right apps for your market (Break into groups)– Targeting the consumer/enterprise segments: what do your

customers want?– Matching applications and VAS to your brand strategy.

• 15:00 – Networking break and refreshments• 15:30 – Using Managed Services to enable competition in the

apps market.– Managing developers and apps without the internal support

infrastructure.– Assessing the competencies required from apps Managed Services

vendors.• 16:00 – End workshop

Competing in an alien world

• Adapting the business model to operate successfully against alien competitors, such as Apple

• Preventing the relegation of operators to ‘bit pipe’ status through applications ownership

What is the classic business model?

• Subscribers – increase numbers to increase revenue

• ARPU – increase data traffic by up selling smart phones with data plans

• Attract – lucrative business clients with targeted services

• Contract with device manufactures for premium phones with network specific features that improve stickiness and reduce churn.

• Carrier owns the customer relationship.

How has the business model changed?

• Let’s talk Apple.

If there ever was one killer device Apple iPhone seems to fit – Source (Forbes)

SMART PHONES GENERATE PROFITS

WHERE APPLE GOES OTHERS FOLLOW

Why has Apple been so successful?

• COMPLETE CONTROL• NO FRAGMENTATION• APPLE OWNS THE CUSTOMER

RELATIONSHIP• EXCELLENT DESIGN

Apple has complete control

• One hardware platform• One OS platform• Developers must follow Apple’s method

to develop applications• One Application shop• One Billing method

Apple has no fragmentation

• Developers deal only with Apple. They do not deal with the wireless carrier.

• Developers deal with only one device specification.

• Developers deal with only one OS. • Customers must use iTunes.

APPLE OWNS THE CUSTOMER RELATIONSHIP

• The customer is bound to Apple. The investment after the sale is in Apple proprietary information.

• When Apple is no longer exclusive to ATT, I believe a large percentage of their customers will choose Apple over ATT.

EXCELLENT DESIGN

• You have to give it to Apple. They leveraged their user-friendly PC experience and moved it to the smart phone.

• The everyday consumer can and does download a large volume of stuff.

App Store Metrics• Count of Active Applications in the App Store [details]•

Total Active Apps (currently available for download): 264,519 Total Inactive Apps (no longer available for download): 52,603Total Apps Seen in US App Store: 317,122Number of Active Publishers in the US App Store: 53,249

Count of Application Submissions [details]•

This Month (Games): 1,408 ( 64 / day )This Month (Non-Games): 10,425 ( 474 / day ) This Month (Total): 11,833 ( 538 / day )

Application Approval Delay [details]•

August, 2010: Maximum delay 44 days, average delay 4.30 days.

Application Price Distribution [details]•

Current Average App Price: $2.85Current Average Game Price: $1.21Current Average Overall Price: $2.61

The known issues with the ATT/iPhone deal

We have a saying in Texas –

“She got the gold mine and I got the shack”

So who gets the Gold Mine and who gets the Shack?

• ATT network had issues handling the volume of data traffic in key markets:– Brand damage in large metropolitan areas– Initial network issues activating iPhones.

Gold Mine or Shack?

• When does ATT make money in the deal?– 2 year contracts– Data plans – no longer unlimited data

usage• ATT must increase the rate of investment in

their infrastructure to support data traffic generated from iPhone users.

Gold Mine or Shack• When the deal is over who gets the

customers?– ATT signs customers to two-year contract

and subsidizes the cost of the iPhone.– ATT also requires a data plan for iPhone.– Apple requires the iPhone user to install

iTunes to gain access to key functions of the iPhone.

– Apple requires credit card information to install iTunes.

Three perspectives

• Wireless Carrier• Wireless Device Manufacturer• Wireless Developer Shop

Breakout activity• Three groups: 30 minutes

– Wireless Device Manufacturer– Wireless Carrier– Small Application Developer shop

• You will need a spokesperson for the group and a scribe.

• All decisions must be made within the group and by the group.

Topics of group discussion

• Key issues facing each company• What do the timelines look like for each

company?• What made you choose the OS direction• What impact did your decision have on brand?• Who owns the customer in each model?• What are the key risks associated with your

choices?

Wireless Device Manufacturer

• Medium size device manufacturer of cell phones.• Currently does not have a competitive product at the

smart phone level of device.• Need to decide on the features and function of their next

generation smart phone.• Decisions include:

– What OS will run the device, discuss reasons for picking this OS?

– What initial applications will be available on device?– What are the key features and functions this device will offer?– What trade offs need to be considered?

Wireless Carrier

• Medium size carrier with 5 million subscriber base.• You are losing subscribers to other larger carriers due to the

fact that their portfolio of devices is more attractive to business customers.

• Determine short term action plan to reduce the churn of lucrative business customers.– Include wireless devices you believe would compete against

iPhone.– Discuss how the carrier can take its brand to business customers

and prove out the value of a regional focused carrier?– Discuss your preferred Mobile OS?– Discuss the applications you would like developers to develop for

your new product offering?

Small Applications Developer Shop

• Wireless developer shop of around 50 FTE’s produce 3-4 applications a year. Your specialty is business applications.

• Your average costs per application developed is $350,000 USD. • The typical revenue share with carriers is 70/30. You get 70% and

the carrier gets 30%.• Determine the financial numbers required to make a 20% profit with

an average sale price of .99 cents on an apple store.• Determine the financials required to make a 20% profit with a

regional carrier offering targeted business applications for their customer base.

• Discuss what OS you would develop your next three applications on and why you chose that technology stack?

• Discuss your targeted sales channels.

What Platform to Use?

• S3• Meego• IOS• Android• Windows Phone 7• Blackberry OS 6

Key Learning

• In order to compete with Apple, Carriers, Device Manufacturers and Application Developers you must partner!

Networking break and refreshments

• 30 Minutes

Using applications to increase revenue

• Becoming an apps portal to maximize ARPU and differentiate brand.

• The importance of a quick time to market.

WHY DID ATT NOT SEE THE PROFIT MARGINS APPLE EXPERIENCED?

Control Issues

• Lack of coordination between device, applications and network.

• Infrastructure investments not synchronized with product release and application deployments.

• ATT does not have the customer relationship with the developers or consumers purchasing content.

Developer Portals of note

• https://developer.sprint.com/• http://www.nn4d.com/• http://developer.t-mobile.com/• http://www.orangepartner.com/• http://developer.sonyericsson.com/• http://www.forum.nokia.com/Developer_Programs/

Average Life of a Cell Phone

• I’m not sure that is the right question, but the life appears to be around 18 months. The cycle shortens as more technology is advanced to the device user.

• I think the real issue is how often do customers change mobile OS?

Lunch

• 1 hour

Developing the right apps for your market

• Targeting the consumer / enterprise segments: what do your customers want?

• Matching applications and VAS to your brand strategy.

Applications & Content

• Applications have been available for smart phones since their introduction six years ago:– Music & Videos big part of this evolution.– No one really captured the consumers until

Apple came along (so thanks Apple).

Catch-up Game for Carriers

• The mobile carriers need to educate their customers on applications and content available; make them easy to identify and locate; easy to purchase; and most importantly easy to use on the device of their choice!

Mobile Applications and Content

• It is estimated that by 2012 the application and content business will be worth 3.5 billion USD worldwide.

How do you get these applications and content

• It’s a very complex problem.• Different technology stacks;

fragmentation between carriers; device manufactures and those that want to steal your customers.

Applications Shops

• GetJar, Cellmania, OVI, Google Market Place, IStore

What happens when you send your customers to these shops

• Who will own the customer relationship?• Does it impact your brand?• What is the quality of the user experience?• Who will support problems with the

applications or content?• Who manages the application developer

when it comes to optimization of resources?

Technical support

Partner support

Conference activities

Evolving product offering

Marketing programs

Brand building

Acquisition DistributionSupportEducation

Developer Lifecycle

A developer program has a natural lifecycle. A program prospers when the right services and systems are applied to each phase of that lifecycle.

Acquisition DistributionSupportEducation

Developer Lifecycle: Acquisition

During the acquisition phase you need a specialized marketing team that knows how to reach out to the developer community with the right message.

Acquisition DistributionSupportEducation

Developer Lifecycle: Acquisition

Marketing team activities include:•conference activities such as workshops,

focus groups, and booth activities•targeted email campaigns•contests•developer days•partner outreach and CRM

Acquisition DistributionSupportEducation

Developer Lifecycle: Education

During the education phase, you need a specialized content team capable of educating the developer about your unique products and services - leading them through a clear process to begin the development process.

Acquisition DistributionSupportEducation

Developer Lifecycle: Education

Content team activities include:•website design and construction•technical writing•specialized content creation•video and flash production.

Acquisition DistributionSupportEducation

Developer Lifecycle: Support

During the support phase you need a specialized technical support team capable of helping your developer community solve problems arising during the development and testing processes.

Acquisition DistributionSupportEducation

Developer Lifecycle: Support

Technical support team activities include:•direct tier 1 support of the developer

community•FAQ and knowledge base content creation

and maintenance•Community/forum moderation activities•API creation and maintenance

Acquisition DistributionSupportEducation

Developer Lifecycle: Distribution

During the distribution phase you need a reliable distribution system capable of taking the newly developed applications and connecting them to the market (internal or external).

Acquisition DistributionSupportEducation

Developer Lifecycle: Distribution

Distribution tools and activities include:•application shop functionality integrated

into leading established marketplaces•secure, reliable enterprise distribution

mechanisms•accelerated paths to market with

established partners

Acquisition DistributionSupportEducation

Developer Lifecycle: Distribution

Marketing servicesContent servicesTechnical support services

The need for different personnel changes as your developer community goes through the natural lifecycle.

Collaborative Session

• Defining the high level work streams for a developer program

• From perspective of your morning breakout sessions

High Level Work StreamsNetwork

APIsTools and

SDKsContractual and Legal

Testing and Certification Web Portal

3rd Party Gateway

Technical Support

Partner Management

Phase 1

Phase 3

Phase 2

Key

KPI Consulting ConfidentialPhase 4

Break out session

• From the perspective of your company, determine the following:– Define the key work streams required for

an effective developer program.– Define the resource requirements to

support the ongoing operations of a developer program.

Networking break and refreshments

• 30 minutes

Using Managed Services to enable competition in the apps market

• Managing developers and apps without the internal support infrastructure.

• Assessing the competencies required from apps Managed Services vendors.

Internal Supporting Infrastructure

• Marketing (3) – Recruit Developers to the program– Developer Events: (Conferences, User conferences, Code

Camps)– Web Content Authoring, Forum moderation, Newsletter

production and Blogger– Technical Writer

• System Administrator/DBA (2)– Security Patches, Web administration

• Technical Support Personnel (2)– Mobile OS specific– Network trained

• Program Administrator (1)

Search

Security

User

CompanyRegistration

Community

Content

Tools

Down-loadables

OnlineContent

UserGenerated

Distribution

Admin-istration

CRM

Forums

SocialMedia

Chat

CampaignsSupporttools

Blogs WikiSystems

The right tools allow you to support your community effectively while continuing to communicate your message clearly.

Competencies Required

• Wireless Industry• Technologies used by wireless

developers• Brand management • Web Design • Global Developer Management • Event Management

End Workshop

• Contact Information:– Kenneth Plunk – CEO KPI

Consulting/DeveloperProgram.com– 2900 Jazz Street

• Round Rock, Texas 78664 USA– http://www.developerprogram.com/site/global/news_events/

articles/managed_services_conf/index.html

– Mobile: +1-512-413-9619– Office: +1-512-218-1001