This is not about products impacting the bottom of the pyramid. This is also not about enabling the communication between villages that do not have telephones in rural India. This is about a well funded startup building mobile apps or m-commerce platform looking to make money 10x out of their investment.
So, when the motive is to confront inhibitions to run a profitable company, these are some of the top 10 myths that I found in my research:
- There is not a single billion dollar company in mobile space: There are companies which have made big and will continue to grow exponentially like a hocky stick. AdMob & Quattro are two good examples of mobile ad networks that made their close-to-billion business in a short-span. InMobi from India will probably be the first billion dollar company.
- The ad-supported business model in mobile space: The top 5 free apps on Apple Store at any point makes a cool 10-15K a day as long its in top 5 through ads. Other platforms do not make even 20% of that being top 1. There are many factors that keeps brands, ad agencies, ad networks, and publishers to stay away from ads such as screen size, resolution, user experience, and navigation system. The point is that ad-based biz model can not be the #1 source of revenue generation.
- India-China together makes a third of potential market and second biggest profitable market after US: Its a pure number game, eCPM is around 50-80 cents on a lower side in US for smartphones. It is as high as $1.2 on a good day at a peak time, and there have been some interstitial iPhone ads with $80 eCPM on iPhones in US. However, eCPM is around Re 1-2, which is 50 times smaller on the lowest side of non-smartphones. With number of phones being double in each of India & China, nothing justifies a worst case dip by 50x in revenue for same infrastructure and inventory. Plus there are major flaws such as poor mobile broadband penetration, low density of smartphones vs feature phones, and not used to buying through cloud.
- The phone has limited CPU, memory and small screen: Moor’s law holds good for mobile devices that CPU, memory and storage doubles every 18 months for same cost. Moto Droid & HTC Incredible is more powerful than some of the netbooks in market. The battery life however does not follow the Moor’s law though.
- Smartphones are too expensive and will take longer to penetrate into all markets, feature phones wil dominate market for a long time: iPhone 3G is $49 bucks now from $599, also the initial commitment of $80/month from AT&T is also around $55. There are unlocked Android devices coming in for $120 soon. Feature phones will vanish like old dialing telephones in 3 years.
- Mobile broadband is huge in Japan, Korea, & south east Asia: Language is a barrier. It is difficult to coordinate for internationalization of bands, ads, agencies, & networks.
- Location based technology is the future: Some of these applications raise eyebrows and could even be an interesting experience for a day or two, they are ‘sticky’ apps like facebook or music on smartphones. No stickiness means less CPMs, means less CTRs, means lesser CPMs, and hence low eCPMs.
- Augmented native apps or hybrid apps are not profitable: I do not have data to prove this but this is surely a myth. Using hybrid technologies, augmenting native apps, linking apps internally in phones will generate revenue going forward. What happened to Zynga on Facebook will happen in the mobile space once apps start talking to each other.
- Go-To-Market strategy for mobile apps is as easy as Apple’s app store: There are 10 market places for Android to host apps build on Android. Many unlocked phones do not even have marketplaces for few countries. Some of the countries do not have even the billing mechanism. Symbian has about 30 different market places or stores and equal number of blogs. So, if your app is not on iPhone alone, then start building your database of stores and blogs to launch your app 60 days prior to release date.
- Build same app across all mobile platforms at ease with same functionality: You can either fail at building apps across platforms due to time constraints or delay your time-to-market but come up with products with same functionality on different platforms. Opera Mobile is one exception but point is that it is not an easy job.