Archive for June, 2012

Apple’s Retailing Phenomenon

Wednesday, June 27th, 2012

Apple created a total of 35,852 retail jobs in the past five years since the iPhone was launched reportsAsymco.

Employee headcount has grown from about 6400 to 42,200, more than quintupling. During the same time the store count grew from 172 to 361, more than doubling and the total number of employees per store increased from 37 in Q1 2007 to 117 in Q1 2012.

The growth in total retail jobs is very closely correlated with total store visitors. The visitors per store per quarter increased from 125k in Q1 2007 to 235.5k last quarter. Nearly double the number of visitors in five years. It’s this increased traffic that is closest tied to the increase in employment. This is illustrated by the following chart More>>

Appsfire CEO Explains: Here’s How Apps Win

Wednesday, June 27th, 2012

The world of apps is very hard to navigate. It’s a bit of a mystery how certain apps win. And yet it’s an enormous business.

To find out more about how apps are promoted and what wins, we spoke with Ouriel Ohayon, founder & CEO of Appsfire, a company that helps developers promote their apps. The Appsfire app helps users discover and find apps. And Appsfire does deals, promoting specific apps.

Here’s what we learned:

  • There’s a multitude of marketing channels for apps, and promoting an app is still more of an art than a science.
  • Incentive download networks are very effective at driving downloads, but the users end up less engaged. “You get a bunch of downloads, but of users that aren’t worth much, because they aren’t going to use your app.”
  • The market for apps is still very lively. “It’s like there’s infinite demand for new and interesting apps. People just have an appetite for that. Downloading an app is like turning on the TV to see what’s on.”
Here’s the interview, edited.

BI Intelligence: Please tell us about your company, Appsfire.

Ouriel Ohayon: We help people find great apps, and help app makers promote their apps.

We have 16 employees, 10 in Paris and 6 in Tel Aviv.

We have 6 million users, mostly in the US and Western Europe. We’re starting to grow in Asia. Our app has a very high rating: 5 stars on average with 3000 ratings, maybe only 100 apps have such a high rating.

On the business side, we have around 250 paying customers, which includes all of the biggest app developers: EA, Atari, Disney and more. We do app promotion. Our revenue is up 10 times from last year–we didn’t do much revenue last year, but it’s still a good start. We’re seeing exponential growth, and unless we decide to invest massively we’ll be breakeven soon.

We used to be known for our app, but now we’re launching a partners network, exporting the Appsfire experience in other apps–think of it as AdSense for apps. We already have 3 live partners: Dolphin Browser, Textplus, and Uber Media.

BII: Given your expertise in the area, can you walk us through the main distribution channels for apps?

OO: Sure.

The app store sucks for developers because they don’t have control. It’s a store, and the store owner decides what to highlight, when, how much, and so forth.

But, then again, it’s like any store. If your product is on Amazon, or a bricks-and-mortar store for that matter, you also don’t control how your product is presented there. So what you do is to try to control the channels outside your store to lead people to buy your stuff in the store.

So, the channels are:

  • Your own website. If you have a big website, that matters. Facebook, Pinterest, Zynga, Amazon et al. all have a great channel to promote their apps. They take people who go on their mobile website to their app.
  • You can leverage your existing paid or owned media, online or offline.
  • Earned media also matters: influencers, journalists and so on. If an app gets highlighted on several blogs at once, that app will shoot through the rankings. It’s random, but when it works, it works really well.
  • Twitter and Facebook are going to be huge app marketing channels, especially with the deep integration in iOS 6. Once you’re able to share an app with your network in a tap, this is going to be really powerful. But it’s still early.
  • Then there’s “SEO.” There’s Google SEO, trying to lead people to your website to download the app. A lot of people search Google for the “best X app”. And then there’s App Store SEO. Most people don’t search on the app store, but some do, and you need to anticipate their requests, by tweaking the name of your app, the description, the key words. This even though nobody knows how the search algorithms inside the stores really work. But people shouldn’t have to have to guess what your app does.

And finally there’s marketing: pay dollars to get people to buy your apps.

There’s two native marketing channels: there’s iAds for Apple and AdWords for Google. When you sign up as a developer they suggest that you use it.

Then there’s the non-native marketing channels.

There are two big families:

  • The incentive ad networks, which give you a reward, whether it’s cash, virtual goods, or some other freebie, in exchange for downloading an app.
  • And then there’s non-incentive ad networks, which are more like traditional online advertising.

The biggest players in the incentive game are Tapjoy and Flurry Mobile. Apple frowns on that. They’ve already dinged Tapjoy once.

The other problem with incentive ads is that you get a bunch of downloads, but of users that aren’t worth much, because they aren’t going to use your app.

The non-incentive people are all the mobile ad networks like Millennial Media, InMobi and so on.

And then there’s us. We do app promotion. We’re a new kind of marketing channel.

BII: Ok. So now that we know what’s out there–what works? What doesn’t?

OO: It depends on what you mean by “works.” What matters isn’t downloads, but active users. The industry is still very immature. You can buy a bunch of downloads, but that’s not going to do much good if you don’t have users who are actually engaged with your app.

It’s hard for smaller developers to see which channels works best, but the best gaming companies measure ruthlessly how efficient each acquisition channel is. And the answer is… that it’s hard to tell.

The industry is still very young, and so at this stage it’s very much an art and not a science. On the web, there’s a lot more experience and data with the marketing channels that exists, and so user acquisition has been turned into a science. And also users don’t end up inside a store. So there’s no science yet.

What the successful apps do is that they use all channels. And they tweak all the time, and they all use them differently. It’s very hard to say which is best.

These days, you can get a download for a free app for $1.50 to $2.50, more for paid or non-incentivized. The standard pricing is per click or per download. The prices are going up right now because you could use bots to rack up fake downloads, and Apple killed those, so money is flowing back to traditional channels.

BII: One common frustration we’ve heard speaking with app developers is that there are winner-take-all dynamics in the app store, with apps owning certain categories. What do you think about that?

OO: It really depends on the category.

But, one thing is for sure: there’s always room for new winners. Look at Draw Something: it was a huge success, the fastest growth ever in the app store. And yet Angry Birds Space comes along and grows even faster. And a few months from now it’ll be something else.

Take another example: to-do list apps. There are zillions of them. You’d think the market would be saturated. And yet this app Clear came along, with distinctive design, and it shot up to the top of the rankings even though it’s a paid app and all the other ones are free.

It’s like there’s infinite demand for new and interesting apps. People just have an appetite for that. Downloading an app is like turning on the TV to see what’s on.

So no, I wouldn’t say it’s winner-take-all at all.

The flip-side of that is that apps have a very short life cycle: a few months, maybe a year or two. Apple features new apps constantly. And it’s very hard to break through. There’s 650,000 apps out there. There will be a million soon. Out of those, two to five thousand will be very aggressive about marketing. All of that means it’s very hard to break through.

The store is still dominated by Apple’s rankings. The rankings are bad for the industry, frankly. It drives people to buy downloads just to be in the rankings instead of finding engaged users. Meanwhile 99.999% of the apps are hard to access and there’s a huge discovery problem. Apple should get rid of the rankings.

Source: Business Insider Intelligence

Here’s One Of The Biggest Risks To Facebook’s Business That Gets Overlooked (FB)

Wednesday, June 27th, 2012

Facebook payments

Facebook has tried very hard to become a business that’s not strictly advertising supported.

It hasn’t worked. Over 80% of its revenue comes from ads. Most of the rest comes from payments, which is a cut of revenue it takes from developers like Zynga, EA, and others.

Unfortunately for Facebook, and its investors, the payments revenue might not ever take up a bigger portion of the overall business.

In fact, the payments business is going to become a smaller and smaller part of Facebook’s business, it seems.

As Facebook’s users are increasingly mobile, the amount of revenue it can bring in from payments will be hurt, says Scott Devitt of Morgan Stanley.

When people focus on Facebook’s mobile transition, they tend to focus on the fact that Facebook has just begun to advertise on its mobile apps. That’s not that big a problem, according to Devitt. He says Facebook’s mobile app is a the most downloaded on all platforms, and Facebook will release a bunch of great ad formats.

The real mobile risk is that people will play casual social games on their phones instead on the desktop. Facebook can’t take a cut of that revenue, which will severely limit its “payments” business.

Unless Facebook can expand its payments business outside of the social gaming realm, it’s at risk of declining.

Why does this matter? Because Facebook didn’t want to be entirely reliant on advertising. It wanted to find a bunch of revenue lines. It hasn’t happened.

Is this a bad thing? Not necessarily. Facebook has a lot of room for growth with online advertising.

However, if it was thinking that it could have two powerful engines powering the business, it was mistaken.

Here’s Devitt on the mobile threat to payments:

Does mobile pose a threat to payments revenue?

A mobile could challenge payments growth if Facebook does not expand outside of social gaming

Facebook’s payments business today is entirely comprised of revenue from virtual goods sold in social games produced by companies such as Zynga, Electronic Arts, and Facebook allows these companies to leverage its large active user base to scale their audiences, and in return, these companies agree to share 30% of the value of any in-game transactions. In our view, however, a broad shift to mobile app-based gaming may negatively impact growth in Facebook’s payments business unless the company is able to improve its positioning.

Mobile games on iOS and Android devices that leverage Facebook’s social graph to enhance multiplayer gaming do not contribute to Facebook’s payments revenue. Apple and Google take a 30% revenue share from paid apps and in-game transactions, while Facebook does not participate. eMarketer believes that smartphones and tablets represent the next wave of growth for social / casual games, and the company projects US mobile gamers to grow +26% in C2012E and +19% in C2013E, compared to its prediction of just +10% / +6% growth in web social gamers in those same periods, respectively.

Facebook’s recent App Center launch does not appear to change this relationship, at least initially. However, if Facebook can demonstrate that it instigates a meaningful number of iOS and Android game downloads, we see the potential for the company to attempt to negotiate a revenue share.

Source: SAI

Here Is Every Facebook Rating Issued This Morning (FB)

Wednesday, June 27th, 2012

Facebook underwriters began releasing research this morning after the 40-day quiet period ended.

The institutions have been mixed on the company. While many have slapped ‘buy’ ratings on it, the price targets are all over the map. And the average price target is just over $38, which is where the IPO priced at. That’s not a glowing recommendation of the stock.

We’ll be covering all the research on SAI, but to give you a sense of all the actions taken, Business Insider compiled institutional ratings and price targets.

Below, all major ratings on Facebook announced through 9:45 a.m. this morning.

Facebook Ratings

Why Apple’s Former Mobile Ad Chief Thinks His New Company Is Better Than iAd (AAPL)

Wednesday, June 27th, 2012

We just had coffee with Lars Albright, co-founder of Quattro Wireless (bought by Apple for $275 million in 2009) and former director of publisher partnerships at Apple (iAd sales, basically) to hear about his new venture, SessionM.

The company is dedicated to improving engagement in mobile advertising by rewarding consumers for sticking with apps.

The problem with apps — particularly from the point of view of advertisers who want the eyeballs in that medium — is that the generation that grew up with mobile devices is also incredibly distracted and fickle.

“Digital natives,” as Abright calls them, can switch media 27 times an hour. Even if they download an app, they’re likely to abandon them within days or weeks. (Think of how many unused apps there are on your phone.)

SessionM’s solution to this is reward-based advertising, in which users accumulate “mPoints” by repeatedly using an app, completing levels in a game, or otherwise increasing their engagement with it. The rewards come in the form of giftcards, credit for movie tickets, etc. Users are offered a choice of rewards, until SessionM’s software figures out what types of reward you like best.

So far Albright has accumulated 20 to 30 advertising clients, including Adidas, Ford and McDonald’s, to run campaigns in front of an audience of about 20 million people. He has about 40 employees, and, obviously, his business is still scaling up (after taking a $20 million round of funding in May).

His company thus illustrates an interesting split that’s taking place in the mobile ad business: Those companies who are betting on traditional display ads served from exchanges, networks and real-time bidding platforms (like Millenial Media and Apple’s iAd), and those who think that ads and apps can be game-ified so that consumers are rewarded for sticking with them (another such company is Brian Wong’s Kiip).

But Albright demurs. “We’re incremental to iAd or Millennial Media. We’re not replacing banners.” Rather, he argues, SessionM’s reward ads reach a consumer when they’re already engaged in an app, and the action is taking a natural break (such as a reload between levels).

That, he says, solves the main problem with mobile display banners of the type served in the iAd environment: While the branded content that iAds trigger may be incredibly rich, they’re limited by the small, unappealing size of the initial iAd banner that users must click to generate them.

“The limitation is the entry-point,” Albright says of the medium he pioneered. “It’s not going to provide engagement, it’s not going to provide rewards.”

Source: SAI

Google CEO Loses His Voice Just Like Google Has Lost Its Direction

Tuesday, June 26th, 2012

Google CEO Larry Page, who has long been reluctant to speak in public, is claiming that he has lost his voice ahead of three key events for the company:

1) the annual shareholders meeting, where he was a no show

2) the Google’s I/O conference for developers, where he was a no show

3) the earnings report next month, where he will be a no show

Page has conveniently lost his voice just as investors, shareholders and developers are looking to hear from Page on the company’s direction.

The answer is clear. He does not have a direction. Hence he does not have anything to say. If you are a Google shareholder you know that already. Google is lost. It does not have a direction. It does not know if it want to be Facebook, Apple, Microsoft Office, Amazon etc

Google issued a statement saying that Page has “lost his voice” and “can’t do any public speaking engagements for the time being.” The statement said, “Larry has lost his voice. This means he can’t do any public speaking engagements for the time being, including today’s shareholder meeting, I/O next week and our earnings call in mid July.

News sites have speculated about Page’s “mystery Illness,” and Google’s stock has been trending down since late last week.

“We have no specific reason to think there is anything more to Larry’s condition, but we find it odd that the company would already rule him out of the 2Q call, which is likely still a few weeks away,” said Doug Anmuth, an analyst at JP Morgan. “We think this could raise some questions among investors.”

“We have absolutely no idea what is going on,” said CNNMoney’s assistant managing editor, Paul R. La Monica, in a video report Monday. “We can only hope that it’s nothing serious, maybe just a really bad case of laryngitis, and he’s under doctor’s orders not to speak.”

Observers point out that while Page’s health may be a private matter, Google is a publicly traded company.
“There shouldn’t be any mystery (here),” La Monica added. “Google should own up to whatever it is. … It could stop, maybe, any rumors from going around.”

Jokes are flying that Page is trying to elevate his importance to the level of Steve Jobs by highlighting his “illness”, again copying Steve Jobs.

“Not being able to speak hardly puts someone on the same path as Steve Jobs, nor does it keep him from making key decisions or pointing his company in the right direction. It’s also possible the full extent of what’s ailing him isn’t known,” wrote Jena McGregor in the Washington Post.

Cisco Layoffs Coming After July 4th

Tuesday, June 26th, 2012

Chatter of layoffs at Cisco Systems (CSCO) are surfacing again. The layoffs are expect to happen after the July 4th long weekend. It is not know how many workers will be cut. Last time Cisco cut 6,500 employees, a paltry amount, the Wall street had expected 20,000. Many industry insiders expressed disappointment with the paltry layoffs last time, saying that “as usual Cisco comes in on the lower end that the higher end”. Industry insiders say Cisco will eventually have to work toward the 20,000 level very fast as it continues to lose market share on all fronts. The company is so bloated that it need to cut over 40,000 workers in the next three years said another source.

Previously, a Cisco insider said the layoffs will be mostly contractors, “the folks doing the work”, while the over priced fat cats remain, however another insider said hiring of permanent employees has slowed but hiring of contractors has spiked.

Cisco CEO John “Mubarak Hussein” Chambers, has spent over $35 billion acquiring hundreds of companies that have gone no where. There were no synergies behind any of the acquisitions. They netted Cisco a sea of employees that it never needed and has made it uncompetitive at every level. Many employees say that as long as Mubarak Hussein Chambers remains the source of the company’s problems remains intact.

Yet other say that no amount of layoffs will solve Cisco’s problems.

Cisco’s fall from grace was caused by four factors: A momentum shift away from internet and networking companies in the aftermath of the high-tech bubble of the late 1990s; the transition of the Cisco from and emerging to a mature company; growing competition from Alcatel-Lucent (ALU), Hewlett-Packard (HPQ), Juniper Networks (JNPR), Huawei Technologies Co.; and inability to keep up with competition.

What will solve Cisco’s problems is a new leadership; a shift in the company’s culture, a commitment of company’s insiders to buying the company’s stock and a shift from engineeering to economics — as discussed in another piece.

Here I want to add another factor that could potentially help Cisco regain its leadership in the networking industry: Leverage the core business to develop innovative products; and change the innovation model, from one that rely to strategic acquisitions to one that relies on internal capabilities.

To pursue this strategy, Cisco Systems can learn a great deal from Corning Inc. — a 165 year old company that survived and thrived just doing that.

Corning (GLW) began with making electric lamps riding the electricity revolution. The problem, however, is that within a few years 36 companies began doing the same thing — and eventually the market reached saturation. What did Corning do? Leverage its capabilities to make heat resistenca glass for the defense industry. But again the competition caught up. What Corning did? Leverage, again, its core capabilities to make CRTs for TVs. And as competition caught up, Corning went on and on leveraging its core capabilities to develop the one blockbuster product after another: The fiber optic cable, the flat glass, and the green lazer.

The bottom line: Cisco leadership should stick with innovation, not with job cuts to beat the competition.

Microsoft Acquires Yammer For Enterprise Social Networking

Monday, June 25th, 2012

Microsoft (MSFT) is acquiring Yammer, the enterprise social network for $1.2 billion in cash.

Yammer will become part of Microsoft Office Division, led by division President Kurt DelBene. Yammer is an enterprise social networking have to help people work more effectively in today’s workplace. Yammer will beef up Microsoft’s existing collaboration product Sharepoint, however Yammer is a cloud based service unlike Sharepoint which is an on premises server deployment.

This put Microsoft head on in the social enterprise collaboration space with’s Chatter (CRM), Oracle (ORCL), SAP (SAP), VMWare’s SocialCast (VMW), Jive (JIVE), LinkedIn (LNKD) and a host of start ups targeting this space.

RIM May Be Selling Handset Business To Facebook Or Amazon (RIMM)

Sunday, June 24th, 2012

thorsten heins

RIM is considering selling its handset business, according to a report in the British paper The Sunday Times.

Fair warning though, the report does not cite any sources, so treat the news with some skepticism.

The Sunday Times says Facebook and Amazon are two potential buyers for RIM’s handset business. RIM would keep its enterprise services if such a deal went through, according to the report.

In a comment to CNET on the the Sunday Times Report, a RIM representative had this to say:

RIM has hired advisers to help the company examine ways to leverage the BlackBerry platform through partnerships, licensing opportunities, and strategic business model alternatives. We believe the best way to drive value for our stakeholders is to execute on our plan to turn the company around. This remains true.

That’s nothing new, as we already know RIM hired JP Morgan and RBC to explore options for its flailing business.

RIM announces its quarterly earnings on June 28. You can follow it here.

Source: SAI

ThisMoment Raises $22 Mil For Social Marketing

Thursday, June 14th, 2012

Thismoment DEC - Coke TV

Thismoment, a social marketing platform used by Fortune 500 companies announced that it has raised $22 million Series C round of funding led by Trident Capital.

The company’s platform helps businesses to unify and manage social, digital and mobile communication channels, both online and outdoor. Its offerings compete with Salesforce’s (CRM) Buddy Media and Oracle’s (ORCL) Vitrue offerings.

To date, Thismoment’s social content management software which enable brands to develop and manage their online marketing campaigns, have stayed in the background. The company plans to change that with new round of funding to go mainstream.

The 146-person company, which was founded in 2008 and launched service in March 2010, has now raised a total of $34.8 million. It will also use the money to expand operations within the United States and establish new offices in Europe, Latin America and Asia.