Mobile Monday Boston - Compelling Mobile Business Models

Compelling Mobile Business Models January 12, 2008

present

Keynote: Jeff Glass - Bain Capital Ventures Ajay Agarwal - Bain Capital Ventures

Speakers:Bryan Barletta, Director of Marketing - AppVee Mihael Mikek, President and CEO – CeltraCasey Jones, VP of Business Development – MocoSpaceJorey Ramer, Founder and VP Corporate Development – Jumptap David Nowicki, VP Marketing and Product Management – AirvanaMark Lowenstein, Mobile Ecosystem

Boston Mobile Cluster Map

Boston Mobile Investment 2002 – 2008in millions

2002 2003 2004 2005 2006 2007 20080

100

200

300

400

500

600

Boston Mobile Investment by 2008 Quarter

Q1 Q2 Q3 Q40

20

40

60

80

100

120

140

160

180

200

Total Boston Mobile Companies Receiving Venture Funding in 2008

2001 2002 2003 2004 2005 2006 2007 20080

5

10

15

20

25

30

35

40

45

50

Mobile Startup Landscape

Ajay Agarwal & Jeff Glass, Managing Directors

Mobile Monday, Langham Hotel, BostonJanuary 12, 2009

Bain Capital Ventures

Bain Capital Ventures7Mobile Monday Deck

Mobile Startup Landscape Introduction

Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08

$0B

$2B

$4B

$6B

$8B

2004

$4B

2005

$5B

2006

$6B

Global Venture Capital Mobile Financing



Lemming University


$0.0B

$1.0B

$2.0B

$3.0B

$4.0B

$5.0B

2007

$4.9B

2008

$3.6B

2009

Global Venture Capital Mobile Financing


Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08

?


About Bain Capital Ventures


Since our founding in 1984, Bain Capital has been an extremely active early stage investor and has a deep track record in the mobile space

• First investment was a $600,000 seed investment in Staples

• Seed investors in Aspect Development, which was ultimately sold to I2 in 2000 for $9B

• Other early stage venture successes include DoubleClick, Shopping.com, eCredit, and Taleo (TLEO) and Staples

• Over the years, Bain Capital has made more than 60 early stage investments

• Today, we has over 25 active early stage companies in our portfolio

Our Early-Stage Focus

• Unparalleled Access to the Fortune 2000 and 350+ portfolio companies across Bain Capital, yielding valuable customers and partnerships

• People – our 30-person Venture team allows us to take an active, engaged role in partnering with entrepreneurs

• Analytical Approach – we offer deep strategic and operational experience

Our Value to the Entrepreneur

Our Mobile Portfolio

(acquired by VeriSign)


11Mobile Monday Deck

Mobile Startup Landscape Market Overview

The mobile ecosystem is undergoing systemic change

The network is becoming commoditized, and voice ARPU is dropping rapidly. In fact, it has dropped 19% since Q1 2005.

Smartphone penetration is increasing and operating systems are becoming more open, lead by OS X, Android, Symbian and Blackberry. This is leading to the proliferation of mobile application development.

The balance of power is shifting from carriers to operating system providers as they become the gatekeeper to the phone and the consumer. Apple, Google, and RIM have now all launched app stores where they decide which applications can participate, not the carrier.

The market is expanding as Smartphones become a viable laptop replacement New form factors such as Mobile Internet Devices, navigation

devices, digital cameras, and e-readers are starting to include Wi-Fi capability.

Mobile phones are continuing to replace landlines, and new technology such as femtocells and Wi-Fi enabled mobile phones will only heighten this trend.

1

2

3

4

5

The net result will be an expanded market for mobile data services, and an opportunity for new startups.

Although the market for these services is projected to be large, it’s not clear how revenue will be shared amongst participants, which leaves room open for new and innovative business models.


Historical Acquisition Activity

12Mobile Monday Deck

Mobile Startup Landscape Business Models

Source: CapitalIQ, Bernstein Research – Nokia, July ‘08Note: 1. Exits are for Wireless / Mobile / Cellular companies in US / Canada or Developed Europe backed by a financial sponsor acquired for > $100mm btwn. 1/1/00 and 1/1/07 as of 1/1/09. 2. Consumer Indirect Applications are applications purchased by Carriers / Handset manufacturers and preinstalled on phone while Consumer Direct applications are sold directly to the consumer.

0%

20%

40%

60%

80%

100%

Tra

nsac

tion

Val

ue

Carrier

TelecommProvider

Other

$99.8B

NetworkInfrastructure

Semiconductor

InfrastructureSoftware

Hardware

EnterpriseSoftware

Tower

$19.1B

Consumer IndirectApplication

Content

Consumer DirectApplication

Historically, the bulk of acquisition dollars have gone to service providers, infrastructure software developers and hardware designers…

Voice-C entric Ecosystem

• Historically, carriers controlled the mobileecosystem because they:

– Owned the relationship with the consumer

– Determined handset subsidies

– Controlled application availability

• Carriers competed with each other based on:– Network Coverage (Early to late

‘90’s)– Network Quality (Late ’90’s to mid

’00’s)– Price (Mid ’00’s to

current)

Therefore, companies that enabled increased coverage, increased quality, or lower pricing thrived…

This meant that their priorities were those that were rewarded…


Recent Acquisition Activity

13Mobile Monday

Deck

0%

20%

40%

60%

80%

100%

Tra

nsac

tion

Val

ue

Carrier

TelecommProvider

Other

$38.5B

Consumer Platform

Enterprise Software

Semiconductor

DataProvider

Hardware

Network InfrastructureInfrastructure Software

Tower

$22.1B

Content

Consumer DirectApplication

Consumer IndirectApplication

Wireless/Mobile Exits (2007 – 2008)

Data-Centric Ecosystem


Source: CapitalIQNote: 1. Exits are for Wireless / Mobile / Cellular companies in US / Canada or Developed Europe backed by a financial sponsor acquired for > $100mm btwn. 1/1/07 and 1/1/09 as of 1/1/09. 2. Consumer Indirect Applications are applications purchased by Carriers / Handset manufacturers and preinstalled on phone while Consumer Direct applications are sold directly to the consumer.

However, as the landscape changes, priorities are shifting towards data services, and over the past two years companies that enabled such services have seen success…

• Mobile penetration in developing countries is reaching saturation

• Voice ARPU is declining

→ Carriers must increase Data ARPU to

grow

• Concurrently, as handset manufacturers try to maintain pricing, they are changing their focus from handset design to improving handset feature sets.

→ Therefore, the emphasis is shifting to

data-centric offerings including

navigation, music, video, internet,

and games.

Over the past two years, service providers represented only 43% of total acquisitions, with data oriented assets making up the bulk of the rest


Recent Acquisitions

14Mobile Monday

Deck

Date Target Buyer Transaction Value (M)

2/11/2008 Danger, Inc. Microsoft Corporation $714.3

Developer of Sidekick mobile platform

6/24/2008 Symbian Limited Nokia Corp. $264.0

Developer of Symbian mobile operating system

1/2/2008 Apertio Limited Nokia Siemens Networks Oy $140.0

Developer of subscriber-centric mobile network platform

Total $1,118.3

8/28/2007 NAVTEQ Corp. Nokia Inc. $8,003.0

North American and European digital map database and associated technologies

7/23/2007 Tele Atlas NV TomTom NV $2,824.7

Global digital map database and associated technologies

4/22/2008 Gracenote, Inc. Sony Corporation of America $260.0

Music track database and associated technologies

Total $11,087.7

11/8/2007 Coding Technologies AB Dolby Laboratories Inc. $278.7

8/24/2007 Chipidea Microelectrónica S.A.MIPS Technologies Inc. $161.9

5/21/2007 Hantro Products Oy On2 Technologies Inc. $113.8

6/21/2007 Centrality Communications, Inc.SiRF Technology Holdings Inc. $286.8

6/12/2007 Global Locate, Inc. Broadcom Corp. $226.0

12/13/2007 u-NAV Microelectronics CorporationAtheros Communications Inc. $134.3

12/21/2007 GloNav, Inc. NXP B.V. $110.0

Total $1,311.5

10/23/2007 Navini Networks, Inc. Cisco Systems, Inc. $330.0

Broadband wireless access solutions

11/6/2008 Wayport, Inc. AT&T, Inc. $275.0

Public Wi-Fi access points

10/21/2007 LGC Wireless, Inc. ADC Telecommunications Inc. $246.1

In-building wireless / voice access

Total $851.1


Source: CapitalIQ

Over the past two years, successful exits in the mobile data space have included mobile platforms, data assets, enabling technologies, and access points…

Mobile Platforms

Data Assets

Enabling Technologies

Access Points

Navigation

Semiconductors

Audio / Video

Codecs


Financing Activity

15Mobile Monday

Deck

Carrier

Semiconductor

Enterprise Infrastructure

Device

Carrier infrastructure

• The groundwork for mobile data services and applications is still being laid, and therefore the business models that have already been successful are those that:

– Provide the underlying technology for building mobile data services

– Help the mobile data market to inflect rather than depending on the underlying infrastructure being in place

• However, Venture Capital inflows into mobile application companies have increased over the past year

– Although overall investment in mobile was down, the percent being allocated to applications increased significantly.

– Investors are ready to help build the next layer of mobile businesses

0%

20%

40%

60%

80%

100%

2005

$5.4B

2006

$6.4B

2007

$5.1B

2008

$3.6B

Dol

lars

Inve

sted

12.1% 17.9% 16.3% 23.0%

2.6% 3.6% 7.9% 13.7%


Sources: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08Notes: Carrier Applications are those sold through carrier decks, while Consumer Applications are those sold directly to consumers.

During 2008, investment in mobile applications has increased…

Global Venture Capital Mobile Financing Future Opportunities

1

2

Application as % of TotalConsumer Application as % of Total

Government ApplicationEnterprise ApplicationCarrier Application

Consumer Application

16 Mobile Monday Deck

Mobile Startup Landscape Conclusion

We believe that the opportunity to build a business in mobile is as strong as ever, and that there are a multitude of new opportunities for startups trying to be innovative…

What is AppVee?

• iPhone and Android application reviews• Exclusive focus on video• Filter gems from garbage for iPhone and

Android users• Based on merit, not price or downloads• Professionally reviewed and researched• We find what you should know about

Business Model

1) Advertising– On website

• AppVee.com– 700,000 pageviews/mo– 100,000 uniques

• AndroidApps.com– 250,000 pageviews/mo– 30,000 uniques

– Above the fold (5, rotating)– Featured App

– On App• iPhone

• Over 150,000 downloads• 1M+ Ad Impressions• ~10,000 Daily uniques

• Android• Coming Soon

• Top, sticky, rotating• High CTR (up to 1.8%)

Business Model

2) Affiliate Sales– 5% affiliate fee via LinkShare

– Sold tens of thousands of dollars of applications

– Much higher on the iPhone app than website

Business Model

3) Video Ad Share– YouTube

• YouTube Partner within 3 months

– 5min• 5min Partner from start

Mobile Challenges• Exposure, exposure, exposure

– Rising number of applications = lost in the crowd• AppVee is one solution focused strictly on solving this problem

• Gatekeeper restrictions– Where does Apple draw the line?– Does Google’s lack of gatekeeping hurt it?

• Rising development costs– More developers, more apps, higher consumer expectation

• Economic environment– Is technology affected? Yes and No

• Market saturation– When will consumers say enough is enough?

• Circle back to exposure

Where is mobile headed?

• Games that rival the Nintendo DS and Sony PSP

• Social gaming• Multi-user applications• Mobile ports of desktop apps• Deeper integration with other devices around

us• More cloud support and desktop syncing

Thanks!

www.AppVee.com

Thanks!

Miha MikekMoMo Boston, January 2009

Celtra is a mobile marketing enabler and a value-added aggregator•Started operations in 07, team of 5, self-funded

•We offer Software-as-a-Service mobile marketing platform (engagement marketing)

Development platform for marketers (ad-agencies, brands, service providers)

SMS, MMS & IVR based campaigns (pers. calls, SMS alerts, coupons, content, comments, trivia, voting, games)

Modular, customizable mobile features and content mgmt. offer creative freedom

It enables integrated marketing campaigns (online and mobile convergence)

•Beachhead: Movie industry

Our clients: 20th Century Fox, Warner Bros, New Line Cinema, Paramount Pictures

2.1. – Solution

Celtra enables integrated marketing campaigns that utilize mobile channel

“there's quite a bit of research out there that's shown existence of mobile in a campaign ... has improved both the response and the interaction rates of the online media.” Eric Bader, Brand in Hand

Multi-channel campaign distribution provides cost-efficiency and audience reach

•Development of campaigns without knowledge in technical aspect of mobile marketing•Turn-key solution for agencies and brands•Reduced costs and “time to market” for deployment of marketing campaigns•New, innovative mobile solutions for integrated marketing campaigns•Significantly better performance (conversion, click-through) compared to traditional promotional channels

Celtra enables fast and efficient campaign creation, deployment and distribution

Case: Notorious movie promotion

Online widget / Facebook app Showtimes widget / WHERE™ iPhone app

"Text and The City” campaign offered daily SMS tips form Carrie Bradshaw.

Widget was promoted from the official movie web site www.sexandthecitymovie.com

One out of three “Sex and The City” widget impressions generated a subscription to SMS tips from Carrie Bradshaw

Campaign results (conversion rate)

•Opt-in for SMS alerts: 33%

•Widget installs to personal profiles: 25%

5.2. – Inside the platform / Feature module

4.2. – Inside the platform / Feature module

MoMo January 12

Casey Jones

Company Snapshot

www.mocospace.com

The largest mobile social network in the US, with over 5.2 million registered users and over 2 billion pages per month

#1 Mobile Entertainment site (Hitwise) - # 4 mobile search on AOL- Top 3 mobile site in US (Opera)

founded in 2005 by mobile industry veterans and long-time best friends, Jamie Hall and Justin Siegel

24 Employees in Boston and Israel

+$7 million raised from General Catalyst, Comerica, Pilot Group, retired eBay exec Michael Dearing

-

These are the “Year of Mobile”

www.mocospace.com

Mobile Web has the momentum. . . growing 8X faster than Wired web – Nielsen (UK)

. . . With Mobile Social driving the mobile web

In U.S., 100 million mobile web users and 40 million mobile social users by 2012 - eMarketer

The First Screen for Trendsetters

www.mocospace.com

Highly Engaged Average sessions per day: 1.48

Average pages per session: 108

Average session time: 45 minutes

Average # of friends per user: 60

Average pages per user per month: 1529

Average Age: 21

52% Male 48 % Female

33% African American 33% Hispanic 33% Caucasian

92% US & Canada

Young and Diverse

What’s Working?• Ad Supported Model – mobile and web

– JumpTap, Quattro, Third Screen, Nokia

• Direct Deals – Kmart, Verizon Wireless, LionsGate

• Viral, WOM Growth – 5 million e-cards over Holidays

• Entertainment partnerships– Island Def Jam– SonyBMG– EMI– SRC

www.mocospace.com

Diversifying Revenue Streams

Display Advertising BannersSponsorshipsCPM/CPC/CPA

MessagingSMS

CommerceRingtonesGamesClassifieds

Premium ServicesVirtual Goods“Bonus” features

Keys to Growth • Great Product / Member Experience – authenticity

• Flat Rate Data Plans – keep activity affordable– MetroPCS, Cricket, Virgin Mobile

• Smartphones driving mobile web browsing

• Lower barriers for publishers help mobile web flourish• $100 for mobile web page vs. short code $$$$• Driving usage and mainstream appeal

www.mocospace.com

www.mocospace.com

© 2008 JumpTap, Inc. All rights Reserved. Confidential and Proprietary© 2008 JumpTap, Inc. All rights Reserved. Confidential and Proprietary

Compelling Mobile Business ModelsCompelling Mobile Business ModelsJorey RamerFounder & VP Corporate Development

Mobile MondayJanuary 12, 2009

Jorey RamerFounder & VP Corporate Development

Mobile MondayJanuary 12, 2009

© 2008 JumpTap, Inc. All rights Reserved. Confidential and Proprietary

Who We Are

The global leader in mobile search and advertising solutions

Enable search and advertising for 16 operators in 9 countries and hundreds of mobile websites and applications


Evolution since inception

44


Impact of economic environment

Percentage Of Ad Budgets Expected To Change Over Next Six Months

Increase Maintain Decrease

Online 68% 25% 7%

Mobile 51% 37% 12%

Cable TV 27% 49% 24%

Magazines 18% 47% 35%

Outdoor 17% 54% 30%

Broadcast TV 16% 51% 33%

Radio 16% 49% 35%

Local Newspapers 11% 47% 42%

National Newspapers 9% 43% 48%Source: Advertiser Perceptions Inc. Fall 2008 report. Advertising executives surveyed in October and November 2008.

45


Where mobile advertising is headed (or why mobile will be the Internet on steroids)

46

Personal nature of mediumLocation basedInteractiveExchange real value with userTake phone everywhereTargetable


Thank you

For more information, contact:Jorey RamerVice President, Corporate Development

+1 [email protected]

JumpTap: Ten Emerging Mobile Players to Watch in

2007

JumpTap: 2007 Mobility Award for Entrepreneurial Company

JumpTap: AO Media Top 100 Companies 2007

JumpTap: Best Advertising & Marketing Search Engine

2008

JumpTap: Top 15 Innovator 2007

AirvanaMobile Monday EventCompelling Mobile Business ModelsDavid NowickiVice President, Marketing and Product ManagementJanuary 12th 2009

Stay informed: www.femtohub.com

Airvana At a Glance• Company Facts

– Founded 2000: NASDAQ-AIRV

– HQ in Chelmsford, MA, USA with offices in EMEA, Asia Pacific and the Americas

– Over 500 employees

– 2007 Billings: $142M

• Market Focus– IP Wireless Networks (RAN)

– Fixed Mobile Convergence (FMC) pioneer

• HubBub™ Femtocell

• Universal Access Gateway

– Products deployed in 70 operators on six continents

49

InternetInternetProtocolProtocol

MobileMobile BroadbandBroadband

Partnerships for the Transformed Mobile Ecosystem

50

CORE INFRASTRUCTURECORE INFRASTRUCTURE

RADIO ACCESS RADIO ACCESS INFRASTRUCTUREINFRASTRUCTURE

CONSUMER DEVICESCONSUMER DEVICES

STANDARDSSTANDARDS

First Business: CDMA 1xEV-DO IP-RAN

51

IP-RAN SOLUTIONIP-RAN SOLUTION• IP-RN EV-DO Base Station

• IP-RNC Radio Network Controller

• AirVista Element Management System

AIRVANA ADVANTAGESAIRVANA ADVANTAGES• IP-RAN architecture optimized for mobile broadband

• Consistent fast delivery of EV-DO roadmap

• Rev A VoIP with QoS

• Non-disruptive upgrade path to EV-DO Rev B and beyond

IP-RAN SOLUTIONIP-RAN SOLUTION• IP-RN EV-DO Base Station

• IP-RNC Radio Network Controller

• AirVista Element Management System

AIRVANA ADVANTAGESAIRVANA ADVANTAGES• IP-RAN architecture optimized for mobile broadband

• Consistent fast delivery of EV-DO roadmap

• Rev A VoIP with QoS

• Non-disruptive upgrade path to EV-DO Rev B and beyond

52

Today: Drivers and Barriers of Mobile Services

3G Services Device Innovation

Spotty Coverage Poor Data Performance High Costs & ARPU Challenges

Unrealized In-Home Market

53

Emerging Business: Enter The Femtocell

Issue Femtocell Impact

Coverage Base station for the home

Data Performance

Dedicated capacity; all the bandwidth you need

CAPEX/OPEX Delivery of mobile services far less expensive via femtocells than over macrocell infrastructure

ARPU Potential for increased usage, reduction in churn & uplift from femtozone services

“Enter the femtocell: a little box with a whole lot of promise.”

Fox News, November 2007

“Enter the femtocell: a little box with a whole lot of promise.”

Fox News, November 2007

54

Femtocells Transform The Mobile Network

Mobile Core

Network

MACRO ACCESS

Femtocell andDual-Mode Access

HubBub™ Femtocell

Wi-Fi

InternetUniversal Access

Gateway (UAG)

HubBub™ Femtocell

Femtocells Drive The Digital Home Era

55

PERSONALIZED APPLICATIONSPERSONALIZED APPLICATIONSHome Zone Plan3G phoneHome Zone menu

HOME CONTROLHOME CONTROLVideo Surveillance

Alarms

FAMILY COMMUNICATIONFAMILY COMMUNICATIONPresence-enabled applicationsIntercomVirtual home number

DIGITAL HOMEDIGITAL HOME& ENTERTAINMENT& ENTERTAINMENT

Music and videoGaming

Home Menu

Summary

56

How • Infrastructure Software licensing

• Femtocell Devices and App Enablers

When • Existing: Mobile Broadband Infrastructure

• Emerging: Femtocells (FMC)

Who • Mobile OEM Channels & Operators

• Consumers

Why • Mobile Broadband. Everywhere.

• Transforming the User Experience

Where • Realizing the full potential of the mobile device

• Femtocell at the center of the digital home

Thank You

Stay informed: www.femtohub.com

Mobile Monday Boston - Compelling Mobile Business Models

Technology

Transcript of Mobile Monday Boston - Compelling Mobile Business Models