The "standard" Founder Labs deck for kicking off the Summer 2011 program in San Francisco; updated sections on Silicon, Apple Retail Stores, Ephemeralization

1. Founder Labs
Summer Edition
The Mobile Ecosystem
August 12, 2011
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2. @l1rs
Work Network
Lars Kamp Lars Kamp
Suite 1200
560 Mission Street
San Francisco, CA 94105 San Francisco, CA
415.894.5423 415.894.5423
lars.kamp@accenture.com www.sfmobile.org lars@sfmobile.org
2

3. Companies.
3

4. Today’s topics.
History
Silicon
Mobile Economics
Cloud
What’s Next?
4

5. A note on people’s ability to predict the future.
”People tend to overestimate
what can be done in one year
and to underestimate what can
be done in five to ten years.”
J. C. R. Licklider, 1965
J. C. R. Licklider
“Grandfather of the Internet”
5

6. History
6

7. A bit of Silicon Valley History:
General Magic, Apple spin-off, 1990.
General Magic Mission Statement, May 1990
“We have a dream of improving the lives
of many millions of people by means of
small, intimate life support systems that
people carry with them everywhere.
These systems will help people to
organize their lives, to communicate with
other people, and to access information
of all kinds.
They will be simple to use, and come in a
wide range of models to fit every budget,
need, and taste. They will change the
way people live and communicate.”
7

8. General Magic’s “Magic Cap”.
“Magic Cap” User Interface, 1994
8

9. Three people from the team that architected Magic Cap.
Andy Rubin Tony Faddel Kevin Lynch
9

10. General Magic’s lasting influence on Android…
“Magic Cap” UI, 1994 G1 “HTC Dream” UI, 2008
10 Source: Wired, Accenture analysis.

11. Google is iterating Android at a breathtaking pace…
History of Android
July 2005 Oct 2008 Apr 2009
Android acquired after Android Market Android
Andy Rubin meets with announced. SDK
Larry Page for support. First device. released
2005 2007 2008 2009 2010 2011 2012
Sept 2003
Android
incorporated. … C D E F G H I …
Nov 2007
OHA founded. April Sept Oct May Dec Mar H2
Android uses Google 2009 2009 2009 2010 2010 2011 2011
as default search “Android” platform
unveiled. Cupcake Donut Éclair FroYo GiBr HoCo IC
engine. v1.5 v1.6 v2.0 v2.2 v2.3 v3.0 v3.1
11 Source: Google, Accenture analysis.

12. … including one OEM and SemiCo at a time.
Android
Release
C D E F G H I
April Sept Oct May Dec Mar Nov
2009 2009 2009 2010 2010 2011 2011
Cupcake Donut Éclair FroYo GiBr HoCo IceCrm
v1.5 v1.6 v2.0 v2.2 v2.3 v3.0 v3.1
“Hero”
Device ?
HTC Samsung Motorola HTC Samsung Motorola Nexus
Dream Behold II Droid Nexus One Nexus S Xoom 3
Chip
Qualcomm Qualcomm TI OMAP Qualcomm Intrinsity NVIDIA
MSM7201A MSM7201A 3430 QSD8250 S5PC110 Tegra 2 250 ?
528MHz 528MHz 600 MHz 998MHz 1,000MHz 1,000MHz
12 Source: Accenture analysis.

13. The IP Wars.
Me too.
I will eat
your babies.
Uggh,
FAWK… Om nom
nom
nom.
13

14. Silicon
14

15. Gordon Moore.
15

16. Moore’s Law – since ~1965 on the desktop.
16 Source: Intel.

17. Coming your way in mobile as well.
Nvidia Tegra roadmap: 2 orders of magnitude until 2014.
Today, you
are here
17 Source: NVIDIA.

18. Massive on-deck computing power for smartphones...
1966 2011 2016
Apollo Guidance Samsung Era of
Computer – Block I Galaxy S2 “Uberphones”
4,100 Integrated Circuits ~26M ICs ~1B ICs
1 MHz Clock Speed 1 GHz 1GHz+
9 KB RAM 512 MB ~4 GB
18 Source: Computer History Museum, Accenture analysis.

19. Horizontal de-layering of the silicon industry.
1970s 1980s 1990s 2000s 2010s
Vertical ASIC Fabless IP-driven SW-driven
Suppliers Vendors Semis Design Design
“Texas Instruments” “VLSI Technology” “Qualcomm” “ARM” Various
System
Design &
IP Porting
Distribution
ASIC Vendor (“Fabless”)
IP
Design &
Fully Vertically Distribution
Integrated: EDA Design &
Design & Distribution
Foundry EDA
System EDA
Manufacturer
(Foundry) Foundry
Foundry
Foundry
Ratio
HW : SW 1:0 1 : 0.5 1:1 1:2 1 : 2+
Engineers
Sources: ARM company website, Cadence company website, Accenture analysis. HW engineers refers to design, SW engineers to validation.
Copyright © 2011 Accenture All Rights Reserved.
19 19

20. ARM vs. QCOM.
500 Daily Stock Prices ARM vs. QCOM
Indexed, 01/01/2006 – 03/30/2011 ARM
450 460 Index
05/12/11
400
350
300
250
ARM announcement that
“major OEM” acquired
200 architecture license QCOM
in July 2008 106 Index
05/12/11
150
100
50
0
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Sources: Google Finance, Accenture analysis.
Copyright © 2011 Accenture All Rights Reserved.
20 20

21. Apple: A single application processor for all devices.
iPhone iPad
Apple TV Time Capsule ?
21

22. 2 philosophies:
Discrete baseband & CPU vs. a single, integrated SoC.
Apple: Discrete BB & CPU HTC: Integrated SoC with BB & CPU
iPhone 4 HD7
Qualcomm Baseband Apple CPU Qualcomm Snapdragon SoC
Physical separation of computing for RF Logical separation of computing for RF and
and applications through different chips applications but physically on same chip
22

23. The likely future, just untethered.
23

24. Economics
24

25. Explosive growth for mobility.
“We really see Mobile a bit like Search “eBay mobile apps have been down-loaded
was in 2001, 2002, 2003. All these formats more than 45 million times [with] $4 billion
are so new it is a mistake to say today of volume on eBay Mobile: […] the mobile
whatever we have is a good proxy for what device is absolutely lowering the boundary
the future will look like. I actually have a or blurring the boundary between online and
new metric to report in Android of 550,000 offline; […] this has created incremental
phones activated a day. That's a huge opportunity far greater than what we
number, even by Google standards.” would've expected.”
Larry Page, Google CEO Joe Donahoe, eBay CEO
Q2’11 Earnings Call, July 14th, 2011 Q2’11 Earnings Call, July 20th, 2011
“Mobile” quoted 39 times during call “Mobile” quoted 62 times during call
“We were thrilled to sell a record 20.3 “We [...] have articulated a very strong
million iPhones compared to 8.4 million in innovation-oriented strategy and mobility
the previous June quarter. This represents plays a very strong part in that. […] If you
142% year-over-year growth. […] iPhone look at our results this quarter you'll see that
continues to be adopted as the standard it's not only the new categories that drive
across the enterprise with 91% of the growth for us, it's also the traditional core
Fortune 500 deployed or testing the device, business of SAP. […] Mobile will change
up from 88% last quarter.” the way we work and the way we live.”
Peter Oppenheimer, Apple CFO Jim Hageman Snabe, SAP CEO
Q3’11 Earnings Call, July 19th, 2011 CNBC Interview July 27th, 2011
“iPhone” quoted 48 times during call
25

26. Software-driven innovation.
” The problem is, in hardware you
can't build a computer that's twice as
good as anyone else's anymore. […]
But you can do it in software.”
Steve Jobs, 1994
Steve Jobs
1994 Rolling Stone interview
26 Source: Rolling Stone Magazine.

27. SW is fueling the app store economy: ~350,000 apps.
ESTIMATES
Catalog Size – Apple App Store vs. Android Market
2008-2011, by Number of Available Apps at End of Quarter
350,000
300,000 310,000
250,000
225,000
200,000
149,000
130,000
97,000
74,500
52,610 56,200
35,200
25,300 20,100
13,200 5,200 11,500
740 4,400 600 2,900
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11
Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes
27 books. All numbers rounded.

28. The “early days” with iOS & Android: A mobile revolution.
App & Mobile Web Usage Growth, US
Ads Requested, April 2008 – March 2010
4,000
3,500
32%
3,000
Monthly
Ads Requested (Millions)
2,500 Growth
(Nov’08-Mar’10)
2,000
1,500
19 %
Monthly
1,000 Growth
(Apr’08-Mar’10)
500
0 RIM
Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10
Others incl. Palm
& Windows
28 Source: AdMob, Accenture analysis.

29. But: An app is not a business model.
Retention Rates of Mobile Apps Over Time, 2010
100% 100%
100% 100%
90% 90%
90%
90%
80% 80%
80%
80%
70% 70%
70%
Retention Rate
70%
60% 60%
60%
60%
50%
50% 50%
50%
40%
40% 40%
40%
30%
30% 30%
30%
20%
20% 20%
20%
News (9.1%)
10%
10% News (9.8%) 10%
10%
Enter-
Games (2.4%)
tainment (2%)
0%
0% 0%
0%
0
0 30
30 60
60 90
90 120
120 150
150 180
180 0
0 30
30 60
60 90
90 120
120 150
150 180
180
Days After First Measurement Days After First Measurement
Source: Flurry, Accenture analysis. User retention defined by the number of users who downloaded an application and launched the application at any time in the past,
and also launched the app within the last seven days, e.g. "30 days ago" represents any new user that launched a given app in January and also again within
the last seven days. "60 days ago" represents new users identified in December and also used within last 7 days. Sample based on relevant 5-6 apps per
29 category with at least 120 days of data availability in the Flurry system.

30. 90% dead after 90 days.
iPhone App Retention Android App Retention
As of January 2010, by Application Category As of January 2010, by Application Category
30 Days 90 Days 30 Days 90 Days
News 52% 20% 58% 18%
Social 40% 9% 38% 5%
Networking
Games 34% 10% 34% 10%
Lifestyle 35% 9% 38% 7%
Enter-
33% 4% 42% 16%
tainment
Average
Retention 39% 10% 42% 11%
Rates
30 Source: Flurry, Accenture analysis.

31. Enter analytics…
31

32. … and push notifications.
32

33. Facebook: Putting a social layer into your app.
News and Media Companies Commerce and Sales Companies
90% more articles are read $5.30 of direct ticket sales
85% more time is spent resulted from sharing links
4x increase in traffic from 57% more money spent per user
Facebook
8 minutes longer on site 40% increase in referral
22% more pages are read traffic from visitors
Increase in traffic and time Increase in sales through
spent on websites through user of social plugins:
“Login with Facebook” “Like” and “Share”
33

34. Emergence of solid mobile business models.
Location Inventory Discounts Transparency Reviews
Finds deals at local Real time visibility Real-time Compare local “Crowd-source”
retailers of into restaurant discounts on local price with best reviews before
national chains “inventory” merchant offers prices on the web buying decision
34

35. Ephemeralization:
“Progressively accomplishing more with less”
Buckminster Fuller
35

36. Early “ephemeralization” aka “appification”:
Devices are being replaced by apps.
2006 2011 and Beyond
TV Video
Phone Voice
MP3 Player Music
Camera “Camera”
Credit Card Payments
Copyright © 2011 Accenture All Rights Reserved.
36

37. Software “eating” people and things.
People Things
Taxi Dispatcher ATMs Keys
37

38. And it’s only the beginning.
Global Mobile Shipments
2005-2015E, Millions
‘10 –’15
2,500 CAGR
Total
2,076 8.4%
1,971 Devices
2,000 1,854
1,718
1,557 Smart
820 926
1,500 1,389 707 Phones 25.0%
Millions
582
1,188 1,190 453
1,128 303
1,002 124 151
1,000 173
833 82
57
1,064 1,085 1,105 1,135 1,147 1,151 1,150 Non
500 1,039 954 1.2%
920 SPs
777
0
2005 2006 2007 2008 2009 2010 2011 E 2012 E 2013 E 2014 E 2015 E
SP Share 7% 8% 10% 13% 15% 22% 29% 34% 38% 42% 45%
of Total
38 Source: IDC Accenture analysis.

39. Mobility hardware:
This morning at Coupa Café in Palo Alto: “Bump Cube”
39

40. A quick note on distribution of mobility hardware.
40

41. 26,500 Apple retail employees selling your HW to 250M+
annual visitors in 323 stores in 11 countries.
New York Paris Tokyo
Sydney Munich Shanghai
41 Source: Apple.

42. The Apple Store:
$13B in sales, with more $/SqFt/Year than Tiffany & Co.
Scale of Retail Operations Retail Revenue Metrics
Q3 FY2010 – Retail Retail Retail FTEs / $ / SqFt / Year $ / employee / $ / Day / Store $ / Store / Year
Q2 FY2011 Revenue Stores Space part-time ($) Year ($K) ($K) ($M)
($B) (#) (M SqFt) employees
(K)
13 323 2.5 30 $4,793 $397 $102 $37
$3,010 $337 $36 $13
3.1 233 1 9
$866 $279 $33 $12
50.3 4,172 58 180
$425 $200 $128 $47
419 8,970 985 2,100
$391 $179 $125 $46
9.3 204 23.8 52
42 Source: SECfilings, Accenture analysis.

43. Cloud
43

44. Who is building a cloud?
Prineville, OR USA Lockport , NY USA The Dalles, OR USA
Maiden, NC USA Morrow, OR USA Dublin, Ireland
44

45. Stuff you can do with the cloud (growing as we speak).
~65M+ ~50,000+
Users Searches
Gaming Served Per
Daily Second
~ 7,000+ ~41B
Tweets per API Calls
Second per Day
45

46. Stuff you can do with the cloud and your phone.
46

47. Industrialization of the mobile cloud...
Cloud Device
Today
HTTP
(custom libraries)
Tomorrow
SDKs
47

48. … will bring massive off-deck computing to mobile.
Mobile Dev Center Android Project Hawaii &
AWS SDKs for Cloud to Device Project Maui on
Android & iOS Messaging Framework Windows Phone 7
48 Source: Corporate websites.

49. Google’s Spanner: 107 = 10M machines.
49 Source: Google.

50. Ephemeralization of the back-end.
50

51. What’s
Next
51

52. Jevons’ Paradox
” It is a confusion of ideas to suppose
that the economical use of fuel is
equivalent to diminished consumption.
The very contrary is the truth."
William S. Jevons, 1865
William S. Jevons
From the Book “The Coal Question”
52

53. As computing gets cheaper…
U.S. Asset Prices, 1945 - 2008
Normalized, 1995 = 100
105
Normalized Price: 1995 = 100 (log)
Computers and
Peripheral Equipment
104
103
Transportation
102 Equipment
Other Equipment
Industrial Equipment
10
1950 1960 1970 1980 1990 2000
53 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.

54. … companies consume more of it.
U.S. IT Investment, 1970 - 2008
Investment per Employee & Nominal Annual Investment
3,500 350B
Anuual Investment per Employee ($)
Nominal Anuual Investment ($B)
3,000 300B
2,500 250B
2,000 200B
1,500 150B
IT Investment /
Employee
1,000 100B
500 Annual
50B
Investment
0 0
1970 1975 1980 1985 1990 1995 2000 2005 2010
54 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.

55. Plenty of cash.
Cash on Hand for Select Tech Titans
Cash and Cash Equivalents, as of 1/26/2011
44
39
35
27
29 Total of
22 226B
11
10
7
6
55 Source: SEC filings.

56. And then there is Facebook .
Worldwide Facebook Users Y-o-Y Growth Rates ’11-15
based on 3 User Growth Scenarios, EoY (2011-2015)
US EU BRIC RoW
3 2.5 2.52B 4% 15% 268%* 33%
2.3
2 2.22B 4% 15% 90% 33%
2.1
1.9
1.7 Total of ~700-800M
1.5 global FB users by
end of 2011
1.3
1 1.27B -2% -2% 45% 20%
1.1
0.9
0.7
0.5
2011 2012 2013 2014 2015 Scenario 2
$8.10 $8.18 $8.20 $8.32 $8.54 Avg. ARPU
0.7B 1.0B 1.3B 1.7B 2.2B EoY Users
$5.7B $7.3B $9.6B $12.8B $16.8B $B Rev.
56

57. Think again…
”People tend to overestimate
what can be done in one year
and to underestimate what can
be done in five to ten years.”
J. C. R. Licklider, 1965
J. C. R. Licklider
“Grandfather of the Internet”
57

58. Lessons learned. A few thoughts on:
Your Team: Who’s in charge?
Build: iOS vs. Android vs. HTML5
Pitching: Killer exec summary
Funding (Angels): Ocean’s 11
Funding (VC): Lots vs. little
58

59. Good Luck!
59