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Facebook is now starting to hit physical limits to its digital growth. Three quarters of the company’s revenue are coming from North America and Europe where user growth is slowing down. Facebook’s average revenue per user in the “rest of the world” region, which includes many developing nations in South America and Africa with highest user growth rates, is 10 times lower than the average revenue per user in North America ($0.90 vs. $9.30 per user respectively). To grow its business in emerging economies [tweetable]Facebook needs to look into business models beyond advertising and app installs[/tweetable]. Signs are that Facebook is preparing its next pivot. Piecing together Facebook moves and hires, we believe that [tweetable]Facebook will be launching a social marketplace combined with financial services[/tweetable]. This will unlock new multi-billion dollar markets in the world’s fastest growing economies. A pivot which could be 10 times bigger than its pivot to mobile, which since starting in 2012 was responsible for 76% the company’s ad revenue in Q2 2015. From social network to social marketplace BuzzFeed recently reported that Facebook is experimenting with building out shops within Facebook Pages. E-commerce shops within Facebook pages will turn the social network into a humongous social marketplace where the entire shopping experience will occur within Facebook — from product discovery to checkout. Facebook has created a sprawling mobile messaging empire with its Whatsapp, Facebook Messenger and Instagram apps – reaching 800M, 700M and 300M active monthly users, respectively. In doing so, Facebook is not leading, but following. Facebook is copying the business model of WeChat, Line and KakaoTalk, the asian social messaging apps, which proved that mobile messaging can be monetised through e-commerce. WeChat, Line and KakaoTalk evolved into all-encompassing ecommerce platforms where users can shop for everything from stickers and games, to groceries and cars, and even book taxis and flights. Instagram is already used by people to sell everything from goats to art, and Facebook should be able to turn it together with Messenger and Whatsapp into powerful mobile e-commerce platforms. Adding payment services to Facebook’s messaging empire makes perfect sense. David Markus, who left the position of Paypal CEO to lead Facebook messaging platform, said in his interview to Wired: “VOIP is just one way that the company hopes to use the messaging app as a platform for much bigger things, including online payments.” In March 2015, Facebook unveiled a US-only peer-to-peer payment service for Facebook Messenger that lets you connect your Visa or Mastercard debit card and tap a “$” button to send friends money on iOS, Android, and desktop with zero fees. From Internet.org to Bank.org For now, the Facebook payment service is an extension of a traditional banking service. But what about the countries where Facebook pushes its Internet.org initiative for affordable Internet access? To make payments work in countries without established banking services Facebook needs to create its own “backroom” infrastructure for “storing” money and become a digital bank. The initial opportunity for Facebook is remittance services – a global $583 billion market controlled by  Western Union and MoneyGram. But this is just the beginning. A bank is a financial intermediary that accepts deposits and channels them into loans, where banks make most of their money. In other words, [tweetable]a bank is a platform connecting customers that need credit with customers that have capital surpluses[/tweetable]. To be successful, a bank needs to manage risk and minimize defaults. Financial services in emerging economies require new business models and approaches to managing risk. For example, InVenture runs a Mkopo Rahisi service in Kenya that with the help of an Android app creates a reliable credit score by analysing more than 10,000 data points from the activity on a customer’s mobile handset. Instead of giving this score to banks, InVenture services the loans independently. Shivani Siroya, founder & CEO of InVenture writes: “Since our app launched in Kenya last spring we’ve provided millions of dollars of loans to tens of thousands of customers. Our repayment rate is at more than 85% and more than 90% of our borrowers come back for a second, third, fourth, even fifth loan.” Facebook’s ability to manage credit risk based on information from its social network would be second to none. Imagine how big such lending service for the unbanked can become at Facebook scale! Facebook was always an interesting company to watch. It could well happen that Facebook’s advertising and app install businesses that get so much attention today are just a stepping stone to a much bigger ambition. The ambition of becoming the ecommerce and financial infrastructure for the world’s fastest growing economies. #businessmodel #ecommerce #facebook

The industrial world is undergoing a fundamental metamorphosis. Every industrial company has become a software and data company, overnight. In our latest report, the Industrial IoT Landscape 2015, we bring data on the 1M+ Industrial IoT developers in the world today, and we show that the winning Industrial IoT developer ecosystems are already emerging. “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.” – Jeff Immelt, CEO of General Electric, Minds+Machines summit, 2014 The industrial world is undergoing a fundamental metamorphosis. To paraphrase GE’s Jeff Immelt: every industrial company has become a software and data company, overnight. Two very different engineering cultures are clashing and converging. On the one hand, the traditional industry that knows how to build reliable mechanical and electrical machinery that lasts for decades. On the other, the fast-moving software and data science industry, incubated in consumer markets like e-commerce, digital advertising and social media. Industrial companies will have to be imbued with a software and data mindset if they are to stay competitive. A formidable challenge, to say the least. The transformation of industry is not just about adopting new technology for incremental improvement. When data is put at the center of how industry operates, it will affect the entire business: not just engineers, but also production workers and product designers, marketers and salespeople. There is a dire need for people skilled in handling data with software across all these groups. At the same time, software and data technology are rapidly becoming more accessible. This opens up opportunities not just for large-scale companies – the Bosch’s, GE’s and IBM’s of this world – but also for smaller manufacturers and technology providers. Small fish can become big fish quickly in this new pond. In our new research report, the Industrial IoT Landscape 2015, we tell the story of this metamorphosis from the perspective of those who have the necessary skills – software developers – and those who work to democratize Internet of Things technology – platform vendors. Over 1 million Industrial IoT developers crave better platforms The advent of software developers working in an industrial context is no longer theory. We estimate that [tweetable]there are already over 1 million Industrial IoT developers in the world today[/tweetable]. 61% of Industrial IoT developers are professionals, creating IoT products, selling their services as contractors, or employing their skills to improve their company’s products or processes. The Industrial IoT sector counts significantly more highly-experienced developers (with 6+ years experience) than other areas of the Internet of Things, across software, web, mobile and IoT technologies. This said, [tweetable]the bulk of Industrial IoT development is not performed by veterans[/tweetable] who have been connecting machines for decades. Just like in the broader IoT space, we see a large influx of new blood, starting about 2 years ago. Almost 2 in 3 Industrial IoT developers (63%) has less than 2 years experience in the Internet of Things. The top challenge for 48% of Industrial IoT developer is immature platforms, tools and standards. Developers crave modern software platforms that empower them to build careers and businesses. Our analysis shows that a specific class of platform vendors – companies from Amazon to SAP – have already started providing developers with top-of-the-line tools. The Industrial IoT Landscape 2015 report contains a full profile of Industrial IoT developer demographics, psychographic segmentation, challenges and platform selection criteria. We have evaluated 30+ platforms on their ability to build vibrant developer ecosystems. Find out more here.

[First published in Mobilbusiness, a Swedish online news and analysis publication that uncovers the latest and most relevant news on mobile innovation, market trends and enterprise mobilization.] IoT companies that focus on wrong types of innovation will be left behind. Wayne Gretzky, a legendary athlete, explained why he was so good at the fast-paced game of hockey: I skate to where the puck is going to be, not where it has been. The mobile market is a powerful example: Nokia, BlackBerry, Microsoft, Palm and many others missed the market shift and were left behind. The same will be true for the Internet of Things (IOT): five years from now the IOT market will be very different from what it is today. [tweetable]The future IOT winners skate to where IOT is going to be, not where it is today[/tweetable]. IOT: create a market or vanish Harvard Professor Clayton Christensen explains in “The Capitalist Dilemma” that innovation, comes in three varieties: one is performance-improving (sustaining), another efficiency and a third one market-creating. The history of the mobile handset market is an excellent illustration of how market-creating innovation drives growth and reshapes huge markets in the matter of a few short years. Before 2010 both Nokia and Research in Motion (RIM), the maker of popular BlackBerry devices, were at the top of their game. Nokia owned then 40% of the global handset market, netting $2.6 billion in Q4 2007. Fortune named RIM the world’s fastest-growing company in 2009. But then the tide turned: Market-creating innovations by Apple and Google completely reshaped the industry, wiping out once all-powerful companies. Instead of competing with Nokia and RIM on sustaining and efficiency innovations, Apple and Google created a new market for mobile computers. In this new market demand is driven by apps catering to all possible needs and use cases. More precisely, the demand for mobile computers was (and is) driven by app entrepreneurs who work to discover and address unimaginable variety of user needs and use cases. The entrepreneur-driven demand has created huge new markets that are several times bigger than the existing mobile handset market could ever become. 3 million IOT innovators today The data from VisionMobile’s Q1 2015 Developer Economics survey of over 4,000 IOT developers reveals that the forces of the market creating innovation are already in full swing. Already, more than half of mobile developers (53%) are involved in IOT development. We estimate that this amounts to over three million developers innovating in IOT today. The evolution in the mobile industry holds a clear lesson for companies eyeing the IOT opportunity. Much like in mobile, market-creating innovations will define where the IOT market will be in the future. And just like in mobile, companies that focus solely on sustaining and efficiency innovations will be left behind destined to skate where the market has been. Today analysts forecast billions of connected devices in the market by the end of the decade. But is the number of devices even the right metric? Just like smartphones, the amount of IOT devices shipped is the end-result, not the driving force of the market. Just like in mobile, the demand for IOT products will come from an army of IOT developers/entrepreneurs discovering and addressing thousands of needs and opportunities for consumers and enterprises alike. Just like in mobile, developers/entrepreneurs will decide who will be the winners and losers in the emerging IOT market. The same companies that took the lead in the mobile market now reuse the playbook of market-creating innovation building developer ecosystems on top of their IOT platforms. VisionMobile’s IoT Developer and Platform Landscape 2015 report shows that Apple, Google, and Samsung (who also acquired SmartThings) are the clear leaders attracting most developers across Smart Home, Wearables, Health and Wellness and Connected Cars verticals. [tweetable]The future IOT market will not be the larger version of today’s market[/tweetable]. It will be dominated by developer-centric platforms, operate based on new business models, address needs that we cannot foresee today and serve new categories of customers. To win, skate to where the IoT is going to be: work with developers, play in the consumer market and try new business models.

Microsoft has finally raised the white flag in the battle for smartphone dominance. Microsoft announced that the company will be scaling down its mobile phone business it acquired from Nokia laying off 7,800 employees and writing off $7.6 billion (this is almost the entire value of the Nokia Devices and Service business minus the cash it came with). The decision is dramatic, but hardly unexpected. David Pierce writes in WIRED: “Give Nadella some credit for seeing the writing on the wall, though to be fair it was basically written in huge letters and lit by floodlights.” The writing on the wall is still there and can help us see where Internet of Things will be in a few years. Lesson 1. Business model, not product features define your destiny In my analysis from 3.5 years ago on the VisionMobile blog I argued that the paramount challenge for Microsoft and Nokia is a broken business model, not product features, user interface or integration of software and hardware. (A business model describes how a company creates, delivers and captures value.) From my 2012 blog: “The basis for competition in software and mobile has changed – the once-successful business models of Microsoft and Nokia can no longer ensure profitable growth. Combining two business models of the 1990’s won’t help the two companies regain their positions in the new world order, dominated by companies with Internet-age business models, like Apple, Google, Amazon and Facebook. Looking at the industry through the lens of software-defined business models has helped us to accurately predict years before the story unraveled the duopoly of Apple and Google (2009), the demise of Palm (2009), the outcome of HP’s foray into mobile with WebOS (2010), BlackBerry’s meltdown (2010), and the failure of Windows Phone (2012). The story repeats in Internet of Things. Much like in mobile, [tweetable]software-defined business models cause deep shifts in how value is created and delivered[/tweetable]. The IoT winners will be decided by business model innovation, not by technology, product features or standard committees. VisionMobile’s Stijn Schuermans wrote about it here – What the Internet of Things is not about. Lesson 2. Skate to where the money will be, not where it has been The mobile industry continues to change. In 2013 we wrote, together with Sameer Singh, in the The evolution of the handset business models: “A third wave of disruption will again reshuffle the deck for all [mobile] industry players. We will see growth in a new class of business models, where handset hardware is no longer seen as a source of profits, but is treated as a distribution channel for digital products and services. As price competition increases, commoditization pressure in the smartphone industry, variations of “hardware as distribution”, could become one of the primary drivers of profitability. In 2014 Xiaomi became the most valuable tech startup in the world by executing on “hardware as distribution” business model and creating a new e-commerce market for itself. From “Only for fans, or why Xiaomi is not what you think it is”: “Comparing Xiaomi with other traditional smartphone makers is like comparing Apple with Orange (a mobile network operator). The two happen to be in the same industry, but they are really in different businesses. Apple, Samsung, Huawei, Lenovo sell phones to make profits. Xiaomi sells phones to seed competitive e-commerce business that goes far beyond mobile. Nokia and Microsoft focused on chasing today’s competition and missed the market transition that turned their strengths into weaknesses. The same will be true for the Internet of Things (IoT): five years from now the IoT market will be very different from what it is today. The future IoT winners skate to where IoT is going to be, not where it is today. Lesson 3. Follow developers to find future winners Microsoft and Nokia spent a fortune trying to attract developers to its Windows Phone platform. But it was too late. Google and Apple understood the importance of developers much earlier and had established thriving developer ecosystems. VisionMobile’s Andreas Constantinou wrote in “The Dead Platform Graveyard”: “You can’t buy developer love. You can only plant the seeds.” The data from the VisionMobile Q1 2015 survey of 8000+ developers shows that the majority of developers, including most valuable innovators, make apps for the Android and iOS duopoly (71% and 54% of developers respectively). The story of Windows Phone proves that distant 3rd place is not viable in the ecosystem race. Moreover, as we argued earlier, ecosystems create “Black Oceans” that make competition impossible for late comers to the ecosystem party. Software developers emerge as a driving force in industry after industry, not just in mobile. VisionMobile’s Stijn Schuermans writes in Developer Megatrends 2015: “Developers are conquering the wrist, with 3,500+ Apple Watch apps and 2,300+ Android Wear apps. They’re conquering the car. Android Auto and Apple Carplay will be available on dozens of car models this year. 250+ OBD apps provide aftermarket solutions for car data, with growing support from big players in telecom and insurance. Developers are conquering the home, taking advantage of new technologies and platforms like Samsung SmartThings, Apple HomeKit, Google Weave, Eclipse Smart Home or dozens of device APIs. Developers are even conquering the sky. Major drone players like DJI (from Phantom fame), 3D Robotics (dronekit.io) or Airware are providing SDKs for drone apps, helping developers to put drones to use in industry, agriculture, construction or mining. Cities, healthcare, clothing, factories, … – They’ll all fall to the wave of innovation by developers. Much like in mobile, [tweetable]IoT competitive battles will be decided by attracting developers, not by standards committees.[/tweetable] There is a lot to learn from how the mobile industry was reshaped by software-defined business models, market-creating innovations and developer ecosystems. The lessons are in the plain sight. Microsoft and Nokia ignored them at their own peril. Who will be next?

Software developers are a driving force in every industry and a source of competitive advantage. They are the kingmakers of modern business. In our 50+ page Developer Megatrends H1 2015 report (download it here or see the SlideShare presentation), we highlight 4 key developer trends for 2015. VisionMobile – Developer Megatrends H1 2015 from VisionMobile Every day the evidence is mounting: software developers are a driving force in every industry and a source of competitive advantage. They are the kingmakers of modern business. For mobile devices, there is no doubt. 1.5 million apps on iOS and Android each have propelled us into a new era of mobile computing and given rise to whole industries that weren’t even possible before. Look no further than the havoc that Uber is wreaking in the transportation industry. Developers are not finished with mobile, either. [tweetable]Every year, 800,000 new mobile developers join the pack[/tweetable]. That’s about the population of South Dakota, Macau or Cyprus, every year. Developers are invading more and more industries and verticals. Our Q1 2015 Developer Economics survey showed that 53% of mobile developers are already involved in the Internet of Things, with many more to come. [tweetable]Our latest estimates put the amount of IoT developers over 4 million individuals[/tweetable]. Developers are conquering the wrist, with 3,500+ Apple Watch apps and 2,300+ Android Wear apps. They’re conquering the car. Android Auto and Apple Carplay will be available on dozens of car models this year. 250+ OBD apps provide aftermarket solutions for car data, with growing support from big players in telecom and insurance. Developers are conquering the home, taking advantage of new technologies and platforms like Samsung SmartThings, Apple HomeKit, Google Weave, Eclipse Smart Home or dozens of device APIs. Developers are even conquering the sky. Major drone players like DJI (from Phantom fame), 3D Robotics (dronekit.io) or Airware are providing SDKs for drone apps, helping developers to put drones to use in industry, agriculture, construction or mining. Cities, healthcare, clothing, factories, … – They’ll all fall to the wave of innovation made by developers. When we say developers, we don’t just mean hobbyists tinkerers. Developers matter a great deal to businesses. From telecom to fashion, from logistics to lighting, today’s competitive battles are won and lost by attracting developers. To cite just one example, Salesforce took the #1 spot in CRM systems from Oracle, in large part due to its 1.4M strong developer ecosystem. Every modern company must master developer ecosystem skills if it is to thrive in the information age. 4 key developer trends in 2015 In our 50+ page Developer Megatrends H1 2015 report, we highlight 4 key developer trends for 2015. Developers escape from the app store. Revenue from app store sales or in-app advertising grew by 70% in one year, according to IDC and App Annie. Great news! Or is it? The truth is that [tweetable]the app store alone cannot sustain the mobile developer population[/tweetable]. 60%+ of developers are under the app poverty line and only 1 in 9 is in the safe zone. Most money in the app economy is not made from the app store, but from app-driven e-commerce. Selling offline goods and services via apps represents 71% of the app economy in 2015 – and it’s earned by only 9% of developers! Whether using apps as a channel (like Amazon), building a mobile-first business (like Uber) or using apps as a platform (like WeChat), e-commerce is winning app revenue model and will remain so for the foreseeable future. Developers escape from consumer markets. There is another way to dodge the poverty trap: target enterprises. Only 20% of mobile developers target enterprises, but 46% of them makes over $10K per month, versus 19% for consumer-oriented developers. Making the jump to enterprise might be easier than it seems. There is substantial overlap in what consumer and enterprise app developers are working on. [tweetable]Many apps can be simply repositioned or repurposed to attract an enterprise audience rather than consumers[/tweetable]. We see a similar pattern among Internet of Things developers. Winning app and IoT developers will repurpose consumer technology and business models to solve the most important enterprise problems, and dodge the poverty trap by doing so. Apps escape from screens. The app paradigm of bite-sized software is replicated outside of smartphones: it can be found on the watch, desktop, car, TV, browser, and in the home. The nature of apps is changing too. From yesterday’s traditional app like Angry Birds (where the value is delivered by the app itself), we’ve moved to the companion app. In Honeywell’s thermostat-controlling Lyric app, the value is in the device, and the app is just the remote control. [tweetable]The value in tomorrow’s apps will come from making sense of data[/tweetable]. Apps like Apple Health process triggers and signals across devices, sensors and APIs. As a consequence, data developers and data platforms will soon be king. Platforms escape from mobile. What’s the future of mobile platforms, given the stalemate in platform wars and the evolution to data-centric apps that moves the focus away from mobile OS? Mobile ecosystems like Android and iOS move to the Internet of Things in force, fully leveraging their developer and user bases to gain traction fast across all major IoT verticals. Others like e-commerce players are following in their footsteps, attracting devs with distribution capability and engaged users. Here’s the billion dollar question then: [tweetable]will the network effects from mobile carry over to IoT[/tweetable]? Will the mobile platform duopoly be sustained in IoT? In the future, IoT device selection by consumers and enterprises will be determined by “will it work with my existing services and devices”. We predicted this as early as 2010. In the 2012 edition of the Megatrends report, we talked about the evolving meaning of convergence. From converged networks, to converged devices, to experience roaming. That prediction is now playing out in full. Download the full Developer Megatrends H1 2015 here. #appstore #developers #iot #mobileplatforms

Internet of Things is a buzzword in many board rooms in 2015. Enterprises from logistics to construction to healthcare, are seeing IoT as the source of data-driven cost savings and competitive advantage. For example allowing building operators to drastically save maintenance costs or allowing farms to have real-time insights that can systematically increase the yield of their crops. But there is a much bigger business model shift taking place. One that will cause traditional industry boundaries to collide and some to even collapse. To understand how IoT will change the business world, you need to understand Zenefits. Zenefits is one of those unicorns media loves to talk about and VCs would crave to fund. Since launching in May 2013, Zenefits reached $20 million run-rate by the end of 2014, and is projected to reach $100M run-rate by end 2015. And it just raised a whopping $500 million series C at a $4.5 billion valuation. Andreessen Horowitz, the famed venture capital firm now lists Zenefits as its largest investment to date. Zenefits is an insurance broker disguised as free online HR software. The California company offers SaaS HR services to over 10,000 small and medium-sized businesses to help them manage all their HR processes in one place. Best of all it’s free. Zenefits earns commissions on health, dental, vision, life, disability, or any other insurance, every time their SMB customers open up a new health plan or onboard a new employee through its SaaS solution (In the US, every company has to offer their employees minimum health care). Zenefits adds value in helping small companies manage the complexities of HR. It captures value as an insurance broker. In essence, Zenefits is an insurance company that offers free SaaS services to acquire customers. SaaS requires low-cost low-touch sales and so Zenefits profits on the delta between the customer acquisition cost (CACs) in the HR and SaaS industries. Of course, Zenefits creates a captive audience which it then can resell into more insurance services and higher profits. Our ‘low-touch’ online model exceeded our expectations, affirming the continued health of our core business [source] Wired magazine calls Zenefits’ business model “crafty and unusual”; crafty in using indirect models to profit, but as we’ll soon see Zenefits’ cross-industry business model is not unusual, but relatively unknown. In fact cross-industry subsidies are business as usual for mobile industry disruptors including Google (providing the Android OS for free), Amazon (providing e-readers at cost), Xiaomi (providing mobile phones at cost) and WeChat (providing communications apps and storage services for free). At VisionMobile we’ve been studying how these companies have disrupted the mobile industry through Asymmetric Business Models (see our earlier report on the topic) a business model that crosses industries, by forcing profits to migrate from one industry to another. And we argued in that paper: In the digital era, companies can get an unfair competitive advantage by breaking industry boundaries. The next diagram shows how Google, Facebook, Amazon and Xiaomi have been transferring profits across industry boundaries, and thereby enjoying an unfair advantage. Apple has an unfair advantage over Nokia by offering a library of over 1 million apps and 40 million songs, while capturing value in premium connected devices. Google has an unfair advantage over Yahoo and Microsoft in Search when capturing value in online advertising by creating value in the free Android that allows smartphone, tablet and IoT makers to compete. Amazon has an unfair advantage over eBay and Wallmart, by offering Kindle tablets at cost while capturing value from that captive audience in e-commerce sales. Xiaomi as unfair advantage over Samsung by offering rock-bottom priced devices and wearables to its fan base, while capturing value in e-commerce services. WeChat has an unfair advantage over telecom operators by offering free messaging and voice calling while capturing value in e-Commerce, brokering anything from branded emoticons to car sales. Last but not least Facebook. [tweetable]What Facebook lacks in vision it makes up in execution[/tweetable]. Its Facebook Messenger, now at 700 million users, has been copying the asymmetric business model of WeChat by allowing games to be bought and played within Messenger. David Marcus, head of Messaging products at Facebook sees voice calling within Messenger as a platform for much bigger things: VoIP is just one way that the company hopes to use the messaging app as a platform for much bigger things, including online payments. IoT is taking industry collision to the next level What Zenefits, Google and weChat have pioneered, IoT is taking to the next level. Internet of Things is adding connectivity and computing to thousands of everyday products. Today, most of these objects are following a “one device, one app” paradigm – by slapping an app to a thermostat, car or building management system. Over time, we believe a new paradigm of “one device, apps everywhere” will prevail. In this paradigm, data is not a function of the device, but a product. Think of a fitness band that uploads data into a health service, and allows you to run low-cost, daily health check-ups. Think of a door lock whose data is used to make intelligent decisions about the temperature you set your home to. Think of a smart home security system whose data is used to make decisions on home insurance premiums. Now that we have an understanding on how Zenefits, Xiaomi, Amazon and weChat use asymmetric business models, we can see that IoT will effectively unlock data from connected things in any industry and monetise that data in another industry. Fitness band makers will capture value in health services. Door lock makers will capture value in the energy market. Car makers will capture value in employee productivity management. Telecom operators will capture value in selling insurance. Effectively, IoT allows hardware vendors to divorce the business model of the device from that of the data that are generated by that device. Once divorced, the business model can “invade” complementary industries. Naturally, companies who use asymmetric business models will wield an impossible-to-beat advantage to their competitors who are caught unawares by new players that do not plan to make profits in their industry. And as we argued earlier in our post on Commerce of Things, an unconnected object will be a missed business opportunity. At the same time, connected objects can threaten your business with unfair competition from other industries. Xiaomi is leading this new era of asymmetric business model era by example – far beyond the cost disruption that mainstream press think it is – and is just about to disrupt the home security industry. Xiaomi just launched their first home security solution for 199 RMB, a set of beautifully designed white-coloured products that, can be easily mistaken for Apple China products selling at 199 USD and not 199 RMB. Yes, at a price of about 30 USD for a full set of home security products, that connect and complement nicely other Xiaomi devices from mobile phones to air purifiers, it is obvious that Xiaomi is not looking at making profit on these devices themselves, but on leveraging data collected from their customers (the “Mi fans”) to provide even more valuable services to them over time. If we assume that Xiaomi is selling these products at cost like they do with their mobile devices, they are in effect securing a first entry in the valuable “home IoT” segment at zero cost of customer acquisition. Traditional home security companies better brace for impact. For those companies in IoT, and even those bringing the IoT and ABM buzzwords in their boardrooms, here’s the recipe for your next executive strategy meeting: Find any industry with a lower customer acquisition cost than yours (e.g. SaaS). Develop or acquire a product in that industry that is a complement to your core business and wrap it around your business. And just like in the mobile industry, [tweetable]most IoT devices will eventually be offered at cost, if not below cost[/tweetable], so beware of newcomers to your industry bearing gifts. Be prepared to challenge the age-old definitions of industries and markets. The world is becoming an unusual meal of business model spaghetti. – Andreas and Nicolas P.S. For readers in Europe, it can be worrying that US and Asia seems so far ahead in using asymmetric business models, from Amazon and Google to Xiaomi and weChat. If Europe wants to stay competitive, including in the digital era, it needs to use such competitive business models, too. –Andreas Constantinou As CEO and Founder, Andreas oversees the growth and strategy of VisionMobile. He has twelve years experience in mobile, having worked with the top brand names in the mobile industry including Telefonica, AT&T, Telenor, Vodafone, Deutsche Telekom, MTS, Nokia, Sony, RIM, HTC, Qualcomm, Ericsson and Microsoft. Over the last five years, Andreas has grown VisionMobile into the leading, most respected research firm on app economy and developer economics, with a client base and reputation that out rivals companies many times the size. Andreas on LinkedIn –Nicolas Sauvage Nicolas Sauvage is a “Software guy”, since first programming at 8 years old, and forever passionate about Software contributing to a better Connected World. He joined the management team of NXP Software in Feb 2011, and took various responsibilities over time including leading the OEM Business Line, worldwide sales, product management, Head of Korea, Head of Greater China. He is an Alumni of TTPCom, OpenPlug, London Business School and INSEAD. Nicolas Sauvage on LinkedIn #businessmodels #iot #Zenefits

The media and blogosphere reaction to Apple Music was mixed at best. Bob Lefsetz, who has written about the music business for over 25 years, says: It’s toast. Bob is making a very common mistake: He assumes that Apple Music is a product aiming to win market share in the existing music streaming market. Bob’s focus is then on how Apple Music’s features and pricing compare with the competition. Apple Music provides nothing new other than a live radio service, which is mildly interesting, but never forget that iTunes Radio didn’t put a dent in Pandora. Spotify and Pandora are services designed to resell music in the existing market structure. [tweetable]Apple Music is a platform designed to create a new market and reshape the music value chain[/tweetable]. The business model playbook is similar to how Google created a new market for small advertisers, Amazon Kindle created a new market for independent book writers, iPhone created a new market for app developers, Uber created a new market for drivers, AirBnB created a new market for apartment owners, Incrediblue created a new market for boat owners and Munchery is creating a new market for chefs. The 3 types of innovation Harvard Professor Clayton Christensen explains in “The Capitalist Dilemma” that innovation, comes in three varieties: one is performance-improving (sustaining), another efficiency and a third one market-creating innovation. A new market for music by connecting artists with users Apple Music aims to create a new market for digital music by connecting artists with Apple users. The platform will empower hundreds of thousands of less-known artists and break the walls inherent to the current industry structure. Jimmy Iovine says in his interview to The Guardian: What’s happened to the music industry, from my perspective, is a lot of great music is behind the wall that can’t get through, and therefore a lot of artists are getting discouraged. And we hope that this ecosystem really helps revive that. And we tried to build something that had enough of each thing to build an ecosystem that just feeds off each other, and gives back to an artist. The recipe is strikingly similar to the Apple App Store recipe: Connect app developers with users to create a new market for software and services that surpassed anything we knew before it existed. New business models for music It used to be that the only way to monetise software was to sell licenses to use it. Who says that the only way to monetise music is to sell licences for downloads or collect streaming royalties? As I wrote in “To understand Beats you need to understand Lady Gaga”, the economics of abundance inherent in digital music open new ways to monetise music. Troy Carter, who discovered Gaga and was her manager until November 2013 summed it up nicely in his interview with FastCompany: It was more about building a platform on top of music—because music, we realized, sells everything but music. Will digital music, like apps, become predominantly free? Apps have become a channel to reach and engage users. Will the same thing happen to music? What role will Apple Pay play in this transformation? Time will tell, but Eddie Cue thinks it’s a possibility. In his interview with The Guardian he said: Our viewpoint was very simple: let the artist and label control it. They can put it up on Connect for free if they want to, or they can put it up behind the [subscription] paywall, or they can make it available on the iTunes Store for sale. They’re in control of their music and how they want to distribute it. Don’t repeat Bob Lefsetz’s mistake [tweetable]Apple Music is more than a differently-packaged version of Spotify[/tweetable]. Google AdWords is more than a less-expensive advertising agency, iOS is more than a nicer-looking version of Symbian, Uber is more than a digital version of a Taxicab stand, AirBnB is more than renting mattresses to strangers and Munchery is more than a bigger restaurant kitchen. These are platforms having very different economics from traditional products. As Marshall Van Alstyne said: Platforms beat products every time. Platforms disrupt industry after industry: telecom, computing, watches, automotive, consumer electronics, banking, education, food, transportation, hospitality, healthcare, and more. When you see a new idea in the market or a new competitor, ask yourself: “Is it a market-creating platform?” and “What will it mean for my business if the platform reaches critical mass?”

More and more car makers understand that “digital” will bring profound change to the industry. Audi chairman Rupert Stadler recently said at CES Asia in Shanghai: “We are experiencing a digital revolution that is having a faster and stronger impact than the industrial revolution. This is the new normal. It will not stop.” The challenge, though, is that the industry often sees connected cars as a linear extension of its legacy business model. This reminds me of how Nokia in 2007 saw the iPhone as competition for better phones. The trends – and history – point in a very different direction. The connected car will be a completely different ball game with new competitors and business models. Connectivity opens the car to Internet companies, which create, deliver and capture value in completely new ways. Software already disrupted many industries. Today there are clear signs of how the encounter with the Internet can become a catch 22 for the car industry as well. A smartphone accessory on wheels Car makers are busy adding connectivity to their cars. Software companies take a very different approach – they instead focus on people, “the connected driver”. For software companies it’s not about connecting the driver to the car. It’s about keeping drivers connected to their digital lives through their smartphones. Google’s Android Auto, Apple’s CarPay and numerous startups like Automatic, Carvoyant, Navdy, Vinli, Dash, WayRay, Zubie and many others work to turn the car into a smartphone accessory on wheels. Google’s Fabian Tamp says in the video introducing Android Auto to developers: “Your car is by far the most complicated accessory we’ve ever attached to an Android phone.” On that rare occasion Apple agrees with Google: “The accessory ‘Toyota’ uses an app you do not have installed” The strategy seems to be working pretty well for Google and Apple. Joanna Stern writes in the Wall Street Journal: “After a week cruising around with Android Auto, I’m convinced this is the future of in-dash technology. Taking the software design out of the hands of car makers and putting it in the hands of phone makers should have happened long ago.” Developers: From podcasts to disrupting after-sale services Apple, Google and startups like Automatic and Carvoyant bring proven app paradigms together with legions of developers to the service of the drivers. [tweetable]The goal is to turn the car into a platform allowing startups to experiment with new use cases[/tweetable] and business models. VisionMobile surveyed 4,000+ Internet of Things developers for our IoT Developer and Platform Landscape 2015 report. It turns out that 61% of connected car developers make apps for Google’s Android Auto or plan to do so, versus 50% for Apple’s CarPlay. Compare that with 22% of developers pinning their hopes on the car-maker-friendly MirrorLink platform. [tweetable]These are still the early days of the connected car developer ecosystem[/tweetable]. Developers are still experimenting with a wide range of car-specific use cases: From listening to podcasts, expense reporting and teen driving to trying to disrupt the most lucrative part of the car business – after-sale services. [tweetable]Dealing with repair shops and dealerships is the most annoying part of car ownership experience[/tweetable]. A growing number of startups try to change that with the model of on-demand services, which works so well for Uber. For example, YourMechanic in the US connects car owners with independent certified mechanics in their local neighborhood. The service helps you find the right mechanic at a fair price, pay for parts and services, and get your car fixed conveniently at your home or office. YourMechanic created an app for the Automatic app store that allows the service to collect real-time diagnostic information from your car, making the service much more useful. The writing is on the wall The writing is on the wall for the automotive industry. [tweetable]The connected car, as it turns out, is much more than adding connectivity to cars[/tweetable]. To compete in this new market car makers will need to learn how to think and act as a software company, leaving behind the comfort of their traditional business model. Android Auto, CarPlay, Automatic, Carvoyant and other ecosystems are leading us to the future where the key purchase criterion for the car is not “what the car can do”, but “what you can do while in the car”. This is much like smartphones evolved from “what the phone can do” in the Nokia era to “what you can do with the phone” in the iPhone/Android era. It will be rather unfortunate, but predictable if car makers repeat Nokia’s mistakes.

You might be forgiven for thinking that Internet of Things stands for adding apps to a watch, or connecting a thermostat to the internet. This is where IoT stands today. More broadly, IoT is about adding computing capabilities to a physical object, and allowing it to interact with the world around it. But this is only the beginning. As we argued earlier, IoT is fast escaping both Internet and Things. And it’s about to change e-Commerce in ways we never expected. An unconnected ‘thing’ is a missed business opportunity Today, it’s well understood that adding computing and Internet to a car, a watch, a thermostat, or a chair can allow the manufacturer to capture value beyond the purchase of that object and into data-driven business models. Car makers can now offer post-sales services, like vehicle diagnostics that alert you when it’s time to have your car serviced by a dealer. Or smartwatch apps that alert you when you’ve forgotten to put your seatbelt on. Watchmakers can create stickiness as you can now use your watch to unlock your front door, or control your thermostat without leaving the couch. Thermostat makers can now expand into energy management. Office furniture makers can now extend their business into productivity management. [tweetable]Makers of connected ‘things’ can subsidise them to make money from data-driven services[/tweetable]. We suspect that new norms will form in industry after industry, as goods manufacturers and services vendors experiment with these new business models. What is clear is that selling unconnected ‘things’ will increasingly look like a missed opportunity. Amazon’s wake up call But there is a much bigger revolution at play. We believe that [tweetable]IoT will fundamentally change the shape of e-Commerce[/tweetable]. With IoT, washing machine makers can now not just deliver detergent just in time by knowing when your supplies run out. They can also recommend the right detergent, based on your usage, type of clothes, on demand. Car makers can recommend where you buy your gas, by understanding your drive journey, availability of gas stations, pricing on-demand discounts, and gas station commission. Watchmakers can command a commission from health insurers, as they can monitor your heart rate, temperature, fitness habits and determine what risk zone you are in. In short, IoT makers can now afford a negative BOM (bill of materials) “a la Dell”, by subsidising the cost of hardware with the revenues from bundled e-commerce services. Internet of Things will allow any connected “thing” to become an affiliate for e-Commerce goods that are consumed together with the “thing” – what in economics are termed complements. Any connected object could become a distribution surface and customer acquisition channel for e-Commerce goods and services of every kind and description. IoT extends e-Commerce affiliate and user acquisition schemes beyond websites, mobile and apps, into every physical object. Amazon’s Dash offers an early glimpse of this model. Place a Tide button on your washing machine, a Huggies button next to your baby’s changing room, or a Gillette button in your bathroom and pronto, your supplies are at your door the following day. More importantly, Dash acts on your intention to buy before you change your mind and pop over to the 7 Eleven convenience store. Similarly, Amazon’s Echo, allows you to order anything from the comfort of your living room, and without lifting a finger. What’s interesting is that nor washing machine neither FMCG companies are directly involved in Amazon’s effort. Amazon’s moves should be a wake-up call for the white goods industry. The Physical Affiliate e-Commerce affiliate sales can happen in two ways: firstly, by pre-sales hardcoding of the e-Commerce service into the physical object. Think how Mozilla was able to make over $200M annually by preloading the Firefox browser bar with Google search, before moving to Yahoo. Affiliate sales can also be dynamic. Think how BMW can recommend a different brand of oil for the maintenance of the car based on price, oil efficiency observed on the car and many other similar cars, and the driver’ analyzed behavior on the road. Naturally, makers like BMW who can create value by tracking user behaviour will also be able to capture more value as an e-Commerce affiliate. White goods manufacturers can now extend their business models across the product lifecycle. They can also own the device real-estate that offers e-commerce discovery and distribution, and act as a customer acquisition channel for e-commerce goods and services. More likely, this customer broker role will be seized by more agile e-Commerce players. And all of this while adding value to the customer. Think: I’d like to buy a watch and improve my fitness at the same time, and get better health insurance cover. Or I’d like to buy a car and save money from fuel, every time. Or I ‘d like to buy a thermostat and have the peace of mind that I’m never spending more on energy bills than I need to. All these Jobs To Be Done are not for the few, the wealthy or the early adopters. In this smarter world, they are for the many. Closing the attribution loop More importantly, [tweetable]Internet of Things will allow e-Commerce to stretch across the breadth of the customer journey[/tweetable]. Consider how limited e-Commerce is today in understanding the customer journey: you search on Google for something to buy, click on what fits your purchase intent, including advertisement link, then lead to a purchase on the device being used. Along that path, Google receives a kickback (typically on a cost-per-click, CPC) from the advertiser on the assumption that a small percentage of those clicking the link will buy, making the business case for paying the CPC. There is no way for advertisers to know when a real purchase was made in a brick-and-mortar shop, let alone make someone with purchase intent visit that physical shop in the first place. This is the holy grail of advertising business, i.e. being able to track consumer behaviour from awareness to intent to purchase to purchase, and across web, mobile and increasingly number of physical connected touch points. By embedding the e-Commerce discovery and distribution surface on physical objects, and more connected touchpoints across the customer journey, you are now able to cross the last mile from awareness to purchase intent to purchase. Put simply, connected devices will become the optimum point-of-sale for e-commerce, search boxes and app stores for services, at the ideal place and ideal context of a purchase intent. The rise of programmatic e-Commerce Moreover, consider billions of “things” doubling as e-Commerce points of sale (PoS). This will result in the unbundling and extension of PoS for e-commerce outside the web (think Amazon.com), app and product (think Kindle) silos controlled by e-commerce players. It will lead to programmatic auctions for e-Commerce Call To Action (CTAs), as the most market-efficient way for matching demand with supply. This will mean that the programmatic, real-time bidding (RTB) for ads today will carry over to e-commerce and into the real world. More importantly, by retaining attribution across the customer journey and touchpoints, programmatic e-Commerce will be able to monetise by Cost-per-Action (CPA) in the physical world while providing enhanced value experience beyond what the comparable but unconnected appliance could ever bring. We can clearly expect a major reshuffle of the advertising industry and a further cycle of VC investment and consolidation that it will entail. –Andreas Constantinou As CEO and Founder, Andreas oversees the growth and strategy of VisionMobile. He has twelve years experience in mobile, having worked with the top brand names in the mobile industry including Telefonica, AT&T, Telenor, Vodafone, Deutsche Telekom, MTS, Nokia, Sony, RIM, HTC, Qualcomm, Ericsson and Microsoft. Over the last five years, Andreas has grown VisionMobile into the leading, most respected research firm on app economy and developer economics, with a client base and reputation that out rivals companies many times the size. Andreas on LinkedIn –Nicolas Sauvage Nicolas Sauvage is a “Software guy”, since first programming at 8 years old, and forever passionate about Software contributing to a better Connected World. He joined the management team of NXP Software in Feb 2011, and took various responsibilities over time including leading the OEM Business Line, worldwide sales, product management, Head of Korea, Head of Greater China. He is an Alumni of TTPCom, OpenPlug, London Business School and INSEAD. Nicolas Sauvage on LinkedIn #businessopportunities #commerce #iot

It’s very clear that software companies took the lead in innovation around voice communications. The telecom industry is lost in the woods arguing about standards, technology and regulation, while Facebook, WhatsApp, Google, WeChat and numerous startups are focused on new use cases and business model innovation. Telco is lost in the woods (again) Telephony is considered a declining business, despite globally increasing dependence on communications. [tweetable]People are not communicating less – they just attribute less and less value to telephony[/tweetable]. Today, many everyday communication needs are better served by alternatives that don’t fall within the narrow definition of telephony. We wrote about freeing voice from telephony almost 3 years ago in our Telco Innovation Toolbox. Today I’m excited to see the future of voice unfolding in full force in front of our eyes. Facebook wants to take over the dialer Did you notice how Facebook has become increasingly bold in everything related to voice and video services? Messenger’s 600 Million users can call each other using voice and video without leaving the app. Facebook-owned Whatsapp also allows its 800 Million users to speak with each other within the app. The huge scale of Facebook voice services surpasses any telco. Compare that with China Mobile, the number one telecom operator in the word, which had 808 Million subscribers as of January 2015. Facebook understands that [tweetable]voice is central to human communication and will always remain so[/tweetable]. Therefore the company wants to make sure that people will speak with each other inside the walled gardens of the company’s social networks. Facebook doesn’t look at voice as a revenue source. Voice is a universal need and therefore it is an effective way to attract and engage users. David Marcus, who left the position of PayPal President to run Facebook Messenger, says: “VOIP is just one way that the company hopes to use the messaging app as a platform for much bigger things, including online payments.” Google Fi wants to take over the core network Google trails behind still trying to break through with its Hangout platform. The recently announced Google Fi service is a shot in the direction of reinventing voice and video communications. So far, most media and blogosphere attention is focused on Google Fi pricing and network switching technology. I believe that these are the least interesting aspects of the Google’s initiative. It’s pretty clear that Google has bigger plans in mind. Google Fi unbundles voice service from the telecom network turning Project Fi into a platform for innovation in communication services. Nick Fox, Google VP of Communications Products writes on the company blog: “As mobile devices continually improve how you connect to people and information, it’s important that wireless connectivity and communication keep pace and be fast everywhere, easy to use, and accessible to everyone. That’s why today we’re introducing Project Fi, a program to explore this opportunity by introducing new ideas through a fast and easy wireless experience.” Today Google uses pricing and network switching technology to attract an initial user base and seed Project Fi for the next stage. The next stage will be opening the platform to Google’s huge base of mobile and backend developers, together with an ever-growing number of Android handset makers. This is when Google Fi will become truly interesting allowing Google to “pull an Android” on the core business of telecom operators and create a credible competition to Facebook’s communication services. Much like Facebook, Google is going into telecom not for wireless plan revenues, but to compete asymmetrically, transferring profits from the telecom industry to its core online ad business. Twilio wants to take over the telecom API Twilio has proven that developers have a genuine interest in telecommunication services. The company offers an API platform for programmatic access to voice telephony, SMS and now instant messaging. The company reports that 700,000 developers have already registered to use its platform. Contrary to the many failed telco attempts at driving revenue with APIs, Twilio proves that telecom developers and APIs can be a good business too. The company is worth over $1 Billion. Twilio chief executive Jeff Lawson says the company hit an annual run rate of $100 million in revenue in 2014, and is adding $1 million in annualized revenue every seven days. The company actively nurtures its main asset – the ecosystem of developers. Twilio teamed up with three well-known venture capital investors, Bessemer Venture Partners, DFJ and Redpoint Ventures to create a $50 Million investment fund to invest in companies using the Twilio API. Twilio flourishes where telco failed: creating an attractive business by building a developer ecosystem on top of commodity telecom services. Developers can reinvent point-to-point telephony into thousands of use cases that telcos were unable to realise. Microsoft wants to take over business services Microsoft is about to join the fray as well. The first move was replacing Lync with Skype, a still hugely popular VoIP service, as a core of its suite of business communication services. For Microsoft, voice is a way to boost Office – its well-entrenched suite of business tools. Exciting times ahead Telephony may be in terminal decline, as most analysts agree. Voice and video will however remain a central part of human communication. These are very exciting times in telecoms for those who understand that [tweetable]”digital” is not a channel, but a new set of business models[/tweetable]. Software companies that use these new business models will use voice communication asymmetrically transferring profits from legacy telephony to their non-telecom business. #voice #googlefi #twilio #facebook #strategy #whatsapp

The world’s largest Droid conference is back in sun&fun Israel! Two days in Tel Aviv gets you next to some of the best thought leaders, experts, and evangelists from the Android world. Our Strategy Director Michael Vakulenko will also be there, dropping the latest on smartphone strategy & competition. Get your sneak peek into new technologies/industry knowledge by registering below! register here: http://il.droidcon.com/2015/registration/

VisionMobile just launched the 9th edition of the Developer Economics survey. This time around, our survey tracks sentiment not only from mobile developers, but also from desktop, Iot, and Cloud as well. The duration is 5 weeks, and we’ll be closing in early June. The key findings from the survey will be available as the free State of the Developer Nation Report in late July. If you’re a developer, then help give back to the community by contributing to our research.

We continue with a fourth and final installment of insights from our most recent publication, IoT Developer Megatrends – a short publication on the most important trends for IoT. It’s clear that the Internet of Things will be a big opportunity. But how exactly will we find that killer app? Or rather, how can we build an engine that turns out one killer app after another? Apps like Instagram, WeChat, Uber or even Angry Birds have created entirely new, multi-billion dollar markets that were not even imaginable before. We concluded in the previous trend that the consumer market is the bigger IoT opportunity because it similarly offers more opportunities to explore new and completely unexpected use cases: a crucial driver of demand for IoT products. To find those opportunities, innovators need to be given free reign to experiment with unlikely ideas. They also need to get every opportunity to present their products to users, without having to get permission from a conservative gatekeeper. Only in this way can we collectively find the hidden gems. Already we’re seeing IoT platforms emerge that consider developers as first-class ecosystem citizens. [tweetable]Developers are not your new customer, contractor or partner. They are your resellers[/tweetable]: they drive demand for your product. Ford, for example, has attracted over 11,000 developers to its platform for car apps. Similarly, the advent of Apple’s CarPlay and Google’s Android Auto are awakening the desire to develop apps for cars in thousands of developers. This is a strong break with the current practice where only a handful of select partners can work with car makers on in-vehicle infotainment. Smart Watch platforms like Pebble, Razer, Android Wear or Apple’s WatchKit open up the wrist to new innovation. No longer do you need to develop the watch itself to provide the service. Already 25,000 developers flocked to the Pebble platform and created 6,000 apps. The same pattern emerges in the Smart Home, where platforms like SmartThings and Apple HomeKit enable developers to combine data from all the connected devices around the home into clever scenarios, which then attract more users. And the winning platform is… (*drumroll*) All these platforms enable developers to orchestrate data streams into valuable scenarios for users. Soon, this will become so easy that everyone can be a “developer”. Then, the true innovation potential of the Internet of Things will be unleashed. Indeed, developer interest in the Internet of Things is picking up fast. Already, 53% of mobile developers are involved in IoT development. This data point from our Q1 2015 Developer Economics survey of 4,000+ IoT developers implies that there are well over 3 million IoT developers active today. All of those people are looking for new and interesting innovations. 45% of them are professionals, seeking to build or grow a business out of IoT. The platform that succeeds best in empowering developers and connecting them with users will be more powerful than any single killer IoT app or product. That platform will have a solution for every need, and will therefore unlock consumer demand beyond its wildest dreams. Because every user and every developer will look at that platform first to find or market a solution – the much lauded network effects – it will be impossible for other platforms to compete. [tweetable]A winner-takes-all outcome – that’s what’s at stake in the Internet of Things[/tweetable]. We can get even more specific. We predict that by 2020, Apple, Google or both will have built a dominant IoT platform that makes head-on competition impossible. Established technology companies like IBM, Cisco or GE, and incumbent IoT specialists like Jasper, PTC or Sierra understand the enterprise IoT market very well. But they are not specialists in connecting developers with users. Google and Apple on the other hand have built ecosystem empires with well over 5 million developers combined. Already both companies are active in every major IoT vertical. Our survey shows that their nascent platforms are the most popular and attractive to developers. For Apple and Google, IoT is an extension of their current efforts, not the creation of an entirely new business. This puts them in pole position at the start of the IoT platform race. #developer #internetofthings #IoTdeveloper

This may be the year when the mobile web apps finally go mainstream. Or, at least, their hybrid cousins will. Not because the technology will finally be ready. For most apps, it already is. Rather, the web will finally hit the big time with mobile apps precisely because we’ll talk about it less and use it more. Time for HTML5 Oh, sure, there are good reasons for the mobile web to finally hit its stride. Sencha’s Nick Harlow offers five: High quality WebViews are now available on most platforms (and getting dramatically better thanks to Apple’s new WKWebView in iOS 8). While low-quality WebViews persist within the Android device base, on balance things are looking up; Broad platform support is only economically feasible using web tech; Web tech bridges the desktop-mobile divide; Using web tech helps to simplify application management and security; and Device fragmentation is accelerating. The web helps developers keep up But before we herald the future of hybrid, it’s worth pointing out that some believe that future is already here. As EmberJS co-creator Tom Dale tells me, “”The dirty little secret of native [app] development is that huge swaths of the UIs we interact with every day are powered by web technologies under the hood.” While Dale may be getting ahead of himself – [tweetable]the reality is that the web still has a long way to go to achieve mass-market app adoption[/tweetable], and maybe constitutes 10% of apps within the app stores – the trends do point toward more hybrid apps, especially among the enterprise set. VisionMobile’s own survey data shows that today 30% of developers are using some kind of cross-platform tool, of which 60% are using PhoneGap. This is great, but it doesn’t obviate the need for the mobile web to get better to erase complaints about performance. And it will. Getting better all the time Summarizing the Google Chrome Developer Summit, Divshot CEO Michael Bleigh says, “Google is doing everything it can to get mobile web to 60fps, which gives you about 16ms per frame to do everything you need to do. It’s hard to even enumerate all the different ways they’re working on this.” Speed will bolster web app performance, perhaps eliminating the “jank” that many associate with web apps. But it’s not just about accelerating the mobile web. We also need to rethink how we approach mobile web apps, as Ionic (based on Google’s AngularJS) and React Native (from Facebook) do. While the latter is not “web technology,” strictly speaking, these frameworks are actively advancing the state of the art for web apps. The result, as Mozilla (and longtime native app) developer James Long puts it, is impressive: It only takes a few minutes playing with React Native to realize the potential it has. This works. It feels like I’m developing for the web. But I’m writing a real native app, and you seriously can’t tell the difference. At the UI level, there is no difference; these are all native UIViews beautifully sliding around like normal. Indistinguishable from native performance… but with a far more accessible development platform. That’s powerful. A question of competence But let’s be clear: [tweetable]if your development team isn’t any good, it really doesn’t matter which development platform they choose[/tweetable]. A bad iOS programmer is going to lose every time to a good HTML5/web programmer, and vice versa. Indeed, one of the primary problems with the web is that it so dramatically lowers the bar to development that virtually anyone with Javascript and CSS skills can build a mobile app. A lame one, that is. Mobile developer Nic Raboy nails this: All my applications, native and hybrid, have mostly positive reviews and if you visit the apps on Google Play, you’ll see no reviews include mention about how the application was crafted. This is an important thing to notice because many haters will attack developers on the idea that hybrid applications do not perform or look as good as native applications. This is simply not true. Native or hybrid, if the developer or designer is no good, the application will suffer regardless. So as fantastic as advancements like AngularJS and ReactJS will be for web app development, they’re not going to be enough if developers underinvest in learning them. There are already exceptional hybrid apps like Instagram that demonstrate what strong developers can do with the web. We just need more of them. Or maybe what we need is better tools. That’s one primary takeaway from VisionMobile’s “How Can HTML5 Compete With Native?” report. As report author Dimitris Michalakos concludes, “The question is no longer *whether* HTML5 can produce quality apps, but *how* easy it is to create quality web apps.” Given that “HTML5 is like driving a car without a dashboard,” the key is to deliver better dashboards, or tools, to make it easier to build great web apps. This involves significant improvements to the debugging, profiling, and memory management tools available, but it’s also something the web frameworks can help with. As such, it increasingly looks like a question of WHEN, not IF, mobile web apps will take off. And the answer to that question is either “now”, if you’re paying attention to how developers actually build apps today, or soon, if you’re waiting for them to start talking about the fact that they’re building with the web. #html5 #mobileweb