While app stores are a great distribution channel for developers that want to sell applications, it is not the best monetization tool if you want to get a living.
There are some mechanisms in the current model of the stores that limit developers on how and what they can charge for the application and services and this has an impact on the quality of the applications and limit their potential.
Ben Thomson of Stratechery nicely list 3 problems in his From Products to Platforms post.
The problem for iPad developers is three-fold:
- First, the lack of trials means that genuinely superior apps are unable to charge higher prices because there is no way to demonstrate to consumers prior to purchase why they should pay more. Some apps can hack around this with in-app purchases, but purposely ruining the user experience is an exceedingly difficult way to demonstrate that your experience is superior
- Secondly, the lack of a simple upgrade path (and upgrade pricing) makes it difficult to extract additional revenue from your best customers; it is far easier to get your fans to pay more than it is to find completely new customers forever. Again, developers can hack around this by simply releasing completely new apps, but it’s a poor experience at best and there is no way to reward return customers with better pricing, or, more critically, to communicate to them why they should upgrade
- That there is the third point: Apple has completely intermediated the relationship between developers and their customers. Not only can developers not communicate news about upgrades (or again, hack around it with inappropriate notifications), they also can’t gain qualitative feedback that could inspire the sort of improvements that would make an upgrade attractive in the first place
A great post by Jeff Jordan, Anu Hariharan, Frank Chen, and Preethi Kasireddy of A16z alias Andreessen & Horowitz
16 Startup Metrics
And some more Startup Metrics 2
Ronal Coase described how integration works in terms of transaction costs, in his famous on the Nature of the Firm:
“The existence of high transaction costs outside firms led to the emergence of the firm as we know it, and management as we know it….The reverse side of Coase’s argument is as important: If the (transaction) costs of exchanging value in the society at large go down drastically as is happening today, the form and logic of economic and organizational entities necessarily need to change! The core firm should now be small and agile, with a large network.”
technology and new business models have enabled a new disrupting ways to create firms.
Tim O’really Networks and the Nature of the Firm
Esko Kilppi The Future of Firms. Is There an App for That?
Ben Thomson AGGREGATION THEORY
Albert Wenger Networks, Firms and Markets
Just got the results from 23andme. It delivered some interesting results and accurate information I already had. Despite the current discussions with the FDA, this is certainly a very important tool for the progress of medicine and science in general. It is also curious to discover whether you have ancestry from different countries.
An indepth view of the company from FastCpompany, INSIDE 23ANDME FOUNDER ANNE WOJCICKI’S $99 DNA REVOLUTION,
23andMe was founded to empower individuals and develop new ways of accelerating research. The members of 23andMe have come together because we believe in the combined potential of genetics and the Internet to have a significant, positive impact.
- We believe that having the means to access one’s genetic information is good.
- We believe that your genetic information should be controlled by you.
- We believe that people’s similarities are just as important as their differences.
- We believe that the value of your genetic information will increase over time.
- We encourage dialogue on the ethical, social and policy implications of personalized genetic services.
- We believe in giving everyone the opportunity to contribute to improving human understanding.
I personally believe in the value of what they are doing and the future is more personalized medicine and tailored drugs. Eric Topol has written a beautiful book, The Creative Destruction of Medicine in which the importance of genomics is highlighted. However, we must also recognize the risks that genomics has regarding our privacy and personal information.
The The Sports Gene: Inside the Science of Extraordinary Athletic Performance by David Epstein shows how genomics helps understand some of the characteristics of different athletes. It is not all about genes, but they play an important role in sport performance.
Recently the FDA has asked 23andme to conform to their regulations and understand the consequences of distributing their information to people that take their tests. Bloomberg, FDA Tells Google-Backed 23andMe to Halt DNA Test Service, the New York Times F.D.A. Orders Genetic Testing Firm to Stop Selling DNA Analysis Service. FastCompany, WHY 23ANDME TERRIFIES HEALTH INSURANCE COMPANIES. Scientific American 23andMe Is Terrifying, But Not for the Reasons the FDA Thinks. Forbes Why The FDA Can’t Be Flexible With 23andMe, By Law.
A set of opinions on the topic opinions nicely summed up by David Dobbs FDA Muzzles 23andMe After Talks Break Down,
A lot of articles and analysis on Amazon, a company with increasing revenues but with low profits and operating even at loss in certain quarters. A strategy that focuses on the long term view, world domination and expansion.
A great recent book is The Everything Store by Brad Stone.
A take from famous VC, Fred Wilson Profitless Prosperity
A view from Benedict Evans Amazon’s profits
an article from the Atlantic, The Amazon Mystery: What America’s Strangest Tech Company Is Really Up To
Blog posts by a former Amazon employee, Eugene Wei Amazon and the “profitless business model” fallacy and Amazon, Apple, and the beauty of low margins
Slate magazine Amazon’s Jeff Bezos Is Like King Midas in Reverse
The interesting fact about digital convergence is that many things can change, disrupting existing players, and industries.
Established business models are not anymore valid and are challenged.
A simple example.
Apple has just announced that the upgrade to the new version of their OS Mavericks will be FREE, and people that will buy their devices will also get the iWork productivity suite for FREE (Page, Numbers and Keynote). Money are made on the hardware.
In the meantime, Google is giving all its software for FREE and eventually selling its hardware at cost, making money with ads.
Amazon, is selling its hardware at cost, making money on the content sold through its devices.
Microsoft makes money on the software that all the others are now giving away for FREE.
And the FREE software or the FREE hardware is actually great, not bad copies of the paid versions. Let’s be clear, nothing is really FREE. They are only monetizing in a different way using asymmetrical business models, that is giving something for free, while making money with something else.
That’s the challenge for Microsoft that used to get paid for what it sold, software. And probably that’s the reason it has acquired Nokia. With hardware and software it can decide to monetize in different ways. Will it be enough?
Chris Anderson, DIY Drones/3D Robotics – XOXO Festival (2013).
A nice intro on how Chris started the DIY Drones and the future possibilities and applications of drones
The world’s biggest smartphone market China will likely ship in more than 450 million devices in 2014, at least a quarter more than this year, research firm IDC said.
From Digitimes Research Tablet AP shipments to China to rise 53% in 3Q13
Shipments of tablet-use application processors to the China market are set to register growth of 24.9% sequentially and 53.3% on year in the third quarter of 2013. The top-3 suppliers – Allwinner, Rockchip and MediaTek – are expected to contribute a combined 70.2% to the overall tablet AP shipments to China in the third quarter.
China Passed U.S. as Top Smartphone Market by Volume in Q3 2011, according to Strategy Analytics. China Mobile, the largest Chinese operator, has 700 million subscribers.
China will easily remain the world’s largest market for smartphones, specifically low-cost handsets based on the Android operating system and to a lesser degree iOS.
Chinese smartphones will be made by:
With Chinese services on top, like: Tencent, Sina, Baidu, Alibaba, RenRen.
A huge market but very competitive and Chinese companies are becoming more and more relevant, not only in China. The next step will be their international expansion.
There are a lot of discussions about how education is going to be disrupted by on-line education. New interactive tools and the Internet allow to learn and drastically lower the high costs associated with the traditional schools.
Some of these online courses are at:
These are great tools that have the potential to bring higher education to the masses.
But not let’s forget the power of connections in the context of higher education. These are what it will land you a job, most of the times.
Forbes writes that U.S. Dominates The World’s Top Colleges.
These top colleges are:
- Massachusetts Institute of Technology (MIT)United States
- Harvard UniversityUnited States
- University of CambridgeUnited Kingdom
- UCL (University College London)United Kingdom
- Imperial College LondonUnited Kingdom
- University of Oxford United Kingdom
- Stanford University United States
- Yale University United States
- University of Chicago United States
- California Institute of Technology (Caltech)United States
- Princeton UniversityUnited States
An article from Reuters tells us that In Silicon Valley start-up world, pedigree counts.
Indeed, the notion that anyone with smarts, drive and a great idea can raise money and start a company is a central tenet of the Valley’s ethos.
Yet on close inspection, the evidence suggests that the keys to success in the start-up world are not much different than those of many other elite professions. A prestigious degree, a proven track record and personal connections to power-brokers are at least as important as a great idea. Scrappy unknowns with a suitcase and a dream are the exceptions, not the rule.
And this article from NYT tells the same story, Behind Instagram’s Success, Networking the Old Way.
The extraordinary success of Instagram is a tale about the culture of the Bay Area tech scene, driven by a tightly woven web of entrepreneurs and investors who nurture one another’s projects with money, advice and introductions to the right people. By and large, it is a network of young men, many who attended Stanford and had the attention of the world’s biggest venture capitalists before they even left campus.
This is not really a surprise. That’s probably the reason some Universities can still ask a lot for the tuition. What you really pay, in addition, to world class professors are connections. Those will allow you to enter the elite of alumni that can help you out after your graduation and during your life.