What Google and Microsoft found out about Smartphone hardware

May 2012 – Google bought Motorola for $13 Billion

Oct 2014 – Google sold Motorola to Lenovo for $3 Billion.

Sep 2013 – Microsoft bought Nokia for $7.2 Billion.

Jun 2015 – Microsoft wrote off the Nokia acquisition.

So both these companies spent a lot of money on buying “patents” or “trying to get into hardware”.

So, what did they find out about hardware?

1. Are they software companies that dont “get” hardware?

2. Is hardware really that hard?

3. Will applying software distribution techniques, margins and marketing work?

4. Is hardware best left to partners who are better at building devices?

5. Why is Apple better at hardware and software but poor at services (remember iTunes Ping)?

6. Will Amazon (which took a big haircut on their hardware as well last quarter) also “give up” on hardware?

7. Why are PC hardware makers – DELL, HP, Lenovo – giving up their leadership on the phone to – Samsung, Xiaomi and HTC?

8. Do you need to have only one hit hardware product (iPhone) and still survive a string of poor also-rans (iPads, Apple TV).

9. Were patents held by Nokia and Motorola worth it?

10. Most analysts and industry observers called this years ago, but why did the CEO’s not see this coming – were their hands truly tied?

Facebook more than Google is the new Microsoft #fastfollower

I was catching up with all the F8 news over this weekend and something struck me as odd. Facebook is the new “fast follower“. They are pursuing the multiple app strategy, not the single app strategy.

It is almost as if they dont have new ideas, but keep picking up the best ideas from every other team and executing it better because of their inherent strengths.

They borrowed the hashtags from Twitter.

They stole stickers from folks like Line and Kakaotalk.

They picked up the send money via messenger from Google wallet.

They also picked up sending messages to small businesses directly from users from the Square app.

I can see their acquisition strategy being similar as well – buying the new age “consumer suite” instead of the Microsoft “office suite” – with WhatsApp for messaging, Instagram for Photos and likely buy Meerkat sometime soon, when they hit mainstream. I still believe they will buy SnapChat sometime in the near future.

The other part of the strategy that makes it interesting is how Microsoft and Facebook realize that they are both competing with Google (Android) and Apple (ioS) in terms of real estate on the mobile phone.

Android just recently announced Work and Home profiles which will allow the user to have 24 – 30 apps which occupy the “home screen”.

Microsoft with the acquisitions of Accompli, Sunrise and LiveLoop now owns email, calendar, productivity and is only missing work productivity – which it did own – via Skype and Skype for Business, by others.

Facebook, with Instagram, Whatsapp and its own apps dominates the “home” fun and communication screen. What it is missing is private sharing (Snapchat etc.) and possibly video (Meerkat).

I can also see Facebook partnering with someone or buying a Music app and a dating app as well.

That’s primarily because most Smartphone users (over 65%) dont download any apps and use the ones that are default on their phone.

The ones that Microsoft and Facebook are missing on iOS and Android are maps (most people use Apple or Google maps) and browser (most folks use Chrome or Safari).

I wont be surprised at all if Facebook partners with ESPN and Weather channel to create “Social Sports” and “Social Weather” apps as well.

The smartphone BOOM in India (2014)

Worldwide there are over 7 Billion people. The total number of mobile connections (active) worldwide in 2013 was 6.2 Billion. In 2014 that number will reach 7.3 Billion. There will be more mobile phone connections than people in the world, even when you account for kids and those who cannot afford a phone.

Of those 6.2 Billion mobile connections, 1.1 Billion are smartphones. 2014 will see 1.05 Billion smartphones shipped. About 273 million of those are replacement and 753 Million are new smartphones.

India has over 800 million mobile connections and 603 million active mobile connections.

Currently of the 603 million mobile phones, 73 Million are smartphones.

India will add 172 Million new smartphones in 2014 to have a total of 250+ Million mobile smartphone users overall.

Imagine that.

170+ Million smartphones this year that are NEW users.

That is almost 2.5 times the number of existing smartphone users in India.

BOOM.

Suddenly there are 2.5 times the people having access to the Internet from India.

By most estimates, India has about 150 Million English speaking users.

These 170+ Million smartphone users in 2014 are not the same as the 70+ Million current users of 2013.

They largely will use the smartphone as a phone, maybe some text messaging, music, movies and videos, and some (or very little) social networking.

Guess who’s making money from these smartphone users in India?

Chinese manufacturers of low cost phones. And resellers of used smartphones in India.

References:

1. 100 Million club.

2. Handset marketshare

3. Smartphone explosion

P.S. As an aside, Facebook claims 94 Million users in India, and 70% users on mobile. There are 70 Million smartphones in India, so you can safely assume that 25 Million fake facebook accounts exist in India. (I am joking, of course, but not by much).

Why I published a personal social network app

I started blogging in 2006. It has taken me over 7 years to build an audience of 60K. When I started, I believed that the best content always won. Now I know that the best content with the best distribution wins.

In 2006-7 the prevalent method to distribute my posts was RSS feeds. I focused a lot of effort to get RSS subscribers. Then FeedBurner got acquired by Google and I noticed that my subscriber base was dropping slowly from 2000+ to under 1000.

I realized that SEO was another mechanism to get new readers to read my posts, but I was not going to do anything unnatural to optimize my content to be “search” friendly.

I focused my efforts on Facebook to distribute my content between 2007-2009. I grew my readership from over about friends and readers to over 4000 in 2 years.

I realized late in 2009 that the Facebook feed algorithm was being changed constantly. This meant fewer friend had a chance to see my posts on their news feed. From an average of 25% of my friends who would read my posts via FB, it started dropping to < 10%.

From 2009 to 2011 I got focused on getting more users on twitter to follow and read my blog posts. I have over 10K followers and about 10-20% of the users come to read when I post.

Some of my friends were in the US, others in India. To optimize time and delivery I created 2 accounts. On one, I’d post at the local US time and at local India time for the other. This was to ensure a better chance of delivery on their twitter feed.

In 2012 I noticed many of my friends and readers from twitter coming to my blog also started to drop. Turned out that most folks were following multiple people and unless you timed it right for that person, it was near impossible for them to see it on twitter.

From 2012 to 2013 I put a lot of efforts into building my email subscriber list. Which has helped me go to about 60K+ readers. Then Google tabs happened and my email open rates dropped from 25% to ~18%. Many of my friends asked me when I stopped blogging. Turns out my blog posts were going into their social or promotions tab in their Gmail. There were not seeing my blog posts at all thanks to the new Gmail tabs.

It was frustrating to see the effort I put into building a channel go waste in 2 years. The more frustrating part was that in all these cases I was not in control.

During the last 7 years I have been constantly posting my thoughts and have not significantly increased or decreased the # of posts per year. I still average 120+ posts a year or about 2-3 a week.

The other part I wanted to clarify was if the quality of my posts dropped, which may have been the reason my readership rose (expectation) and fell (reality).

I think there might be some truth to that, but  engagement with my posts has constantly risen throughout this period. I measure engagement by time spent on my blog, average number of posts per visit, the number of comments and the # of Retweets / Likes on Facebook.

By all measures except Retweets my engagement has steadily risen over the last 5 years.

Over the last 6 months I noticed that more users were reading my posts on their mobile phone than PC or tablet. I also wanted to create a deeper sense of engagement with my friends and readers, and since I like to build a deeper connection I thought the best way to do this was to build a mobile application.

It is available on Apple app store and the Google play store. The Windows phone version will be out soon.

The apps are going to be my primary means of engaging with my friends and folks in the startup community. I am giving up on email and slowly paring down from facebook. It’s lack of immediacy in a real time world bothers me a lot.

There are 3 primary features I wanted in the app:

1. Ability to post items and get feedback / learn from my friends.

2. Find ways to meet friends and readers when I am “close” to their location.

3. Create a close network of friends who can help each other.

The beta version is out now and I’d love for you to give it a spin and connect with me there.

A discussion with Rajan Anandan on #startup trends and the 2020 outlook

Prolific angel investor, MD of Google India and all around nice guy, Rajan Anandan was at the accelerator yesterday to meet our startups and other investors. He mentioned a few very interesting stats and trends that he gets to view at a macro level from his vantage point.

Along with Sandeep Singhal and Aarti Kapoor we had a chance to talk about key trends that will affect startups in India over lunch.

  1.  Android is growing very rapidly in India and smartphone growth has hit an inflection point (across all brands). The estimate for Indian smartphone growth is there will be 40+ Million new smartphones (of all types) overall this year sold and that compares to an existing base of 25 Million smart phones. So, 65 Million smartphones out of a total of 600 Million unique phone users in India. By 2020, over 350 Million phones will be smartphones in India and most of them will be connected (Compared to only 25M connected smartphones in 2012).
  2. Large brands (not digital companies like eCommerce and others) are now beginning to bring their brand campaigns online and digital is complementing TV and print in a significant way. Over the next 3 years brand spending will move to digital in a meaningful way.
  3. SMB spend online accounts for a small 10% of advertising spend online, but is growing dramatically. Given that some estimates put the # of SMB in India to be 45 Million, even 20-30% of them going online in the next 7 years is a dramatic increase in # of SMB  websites in India.
  4. Video will be a key driver of brand advertising in India. While search is a very powerful performance medium, YouTube has grown by leaps and bounds in India and is also strong growth engine.

What does this mean for startups?

  1. Companies focused on getting SMB’s online with a simple and easy to use product will do well he said.
  2. Since the number of English speaking Indians is much smaller than Indic languages, indic language focused startups will have a very bright future
  3. He also was bullish on the Indian eCommerce market, given that FDI in retail will be addressed at some point of time. Companies that have the wherewithal to last the next few years and grow profitably will be ripe for acquisition in a few years.

The 99-0.9-0.1 rule for Indian Startups

Jakob Nielsen is given credit for the 90-9-1 rule of Internet participation.

The “90–9–1” version of this rule states that 1% of people create content, 9% edit or modify that content, and 90% view the content without contributing.

In the last 6 months, I have gotten 21 Indian web and mobile consumer applications data on visitors, engagement and contribution.

In India the numbers are closer to the 99%, 0.9% and 0.1% in terms of lurkers, participants and contributors of any consumer application.

This explains a lot of things, including the 2-speed nature of Indian market adoption.

Its not that we don’t have early adopters, its that most people (99%) are really laggard adopters.

The difference between 1% and 0.1% is dramatic for startups who need the early contributors to get the community going.

To give you an example. Lets take a mobile application which has 3 competitors in India. Each of the 3 products has been in the market for about 6 months and still they total about 140K total downloads.

In the 1% scenario they would total 1.4 Million downloads. This assumes 140M total Internet users for both mobile and web. In reality there are only about 50-80 Million real broadband users.

Is it cultural? I have heard many folks blame (yet again) our Indian culture & education system which values listening to others than voicing our opinions. I don’t quite agree with that though.

I don’t know why exactly we have only 0.1% of people contributing.

This however has dramatic implications for “traction” among startups.

If you are going to show traction and have between 20K to 50K users or downloads, then you should realize that the 99, 0.9 and 0.1 % rule applies again to your users.

Only 0.1% of those who download will actually be contributors (such as check-in to locations if you are Location based service).

So the engagement metrics will be consistent but woefully low compared to what our US counterparts are seeing.

Traction among Indian consumer startups is not really “traction” in other markets.

P.S. I am still trying to see if this is the same for ecommerce startups. I am hesitant to think it will be the same, but among new and smaller (lesser known) ecommerce companies, these numbers are in the range. However, among established companies, the US engagement (or purchase) numbers are probably more valid.

Microsoft Accelerator Research on Smartphone usage in India

We are planning to release research findings every month as part of our startup support program at the Microsoft Accelerator in India.. There are about 50 different topics that we are curious about and are consistently doing research to find out ways to help our accelerator companies perform market research, target early adopters and focus on getting more customer traction.

This series is part of our accelerator database on engagement with startups, investors, mentors & entrepreneurship.

The first research today that we are sharing is based on survey of mobile phone usage in India. Specifically we wanted to focus on smartphones and the adoption of apps on the smartphones.

There were 3 important questions some of our startups that are building mobile applications had, which we wanted to find answers for.

1. Who are the early adopters of mobile applications on smartphones? By age, gender, type of phone & OS.

2. What types of apps get quicker adoption than others? Games vs. social and Connected vs. standalone apps.

3. What is the usage of mobile web among smartphone users?

There are 3 most surprising answers are:

1. Older people (>35) make up 40+% of smart phone users. Used phones make up 18% overall and nearly 25% of smaller city users.

2. While Blackberry is still strong among older users, Samsung has the most number of touch screen and smartphone users overall, followed by a wide range of local brands.

3. The awareness of apps among both younger and older audiences is miserably low. <27% have EVER downloaded an app in India. Over 33% overall and 44% of older users have no data plan.

What does this mean for app developers in India?

1) Like worldwide stats, games trumps productivity and other apps on the mobile. But if you have a game that requires a data plan you are in trouble. So for game makers, the ability to make money from “ads” that are served via a mobile ad server is limited

2. Given that a lot of users are buying used (second-hand) phones in India, expect to support older models for a significant amount of time.

3. Given very little awareness of “apps” among Indian smartphone users, look for offline mechanisms (kiosks) to pop up to support app distribution.

P.S. Some of the slides have not rendered properly on Slideshare even after 2 attempts, so, here is a pdf version. Smartphone usage in India.