The Mobile Tsunami
A recent industry forecast predicted that mobile internet traffic would grow at 100% per year, compounded, from 2010 to 2015. The iPad sold over 3 million units in its first 3 months of sales. This is the fastest product adoption rate in history. What did it beat? The iPhone! It sold over 1.2 million units in its first 3 months to set the previous record. Collectively Apple is expected to sell north of $25 Billion in iPads and iPhones in 2011. And the Android phone market is even bigger than the iPhone market. Mobility is the new reality.
We all know mobile app stores are booming worldwide. A new market research report by MarketsandMarkets acknowledges that trend. According to the research firm’s World Mobile Applications Market (2010 – 2015)report, the total global mobile applications market is expected to be worth $25 billion by 2015 (up from about $6.8 billion in 2010).
And the PC decline is well under way. “IDC today nearly halved its worldwide PC shipment growth forecast for 2011 on the back of continued sluggish consumer demand in mature markets.” –published June 2011.
The Small and Medium Enterprise (SME) and the Attention Economy
We all now compete in an Attention Economy. Consumers are drowning in information overload.
Small and Medium Enterprises are particularly affected because their traditional marketing vehicles – the yellow pages, direct mail, local mail flyers, local TV spots, local newspapers, etc. – are all suffering from declining relevance and effectiveness.
Even the basic internet technologies, those accessible to SMEs, are declining in effectiveness as consumers evolve to new technologies and habits. According to TechCrunch “Total web email usage was down 8% in the past year (YOY), with a whopping 59% decline in use among people between the ages of 12-17. Usage was also down 1% among 18-24 year olds, 18% among 25-35 year olds, 8% among 35-44 year olds and 12%among the 45-54 demographic.” According to a recent Google email, titled Analytics Benchmarking Newsletter, visits to websites are experiencing an overall decline. “Compared to a year ago, websites have seen reduced pages / visit, average time on site, as well as bounce rate.”
As defined by Alex Iskold – “The basic ideas behind the Attention Economy are simple. Such an economy facilitates a marketplace where consumers agree to receive services in exchange for their attention. The ultimate purpose is of course to sell something to the consumer…”
So how does the SME participate in this marketplace? How does an SME earn the right to compete for the target consumer’s attention?
Building an Effective Mobile Presence
As consumers shift their behaviors the SME must respond by creating a new contract with their constituency. Real estate on the mobile device is the new marketing land-grab. Mobile apps are the edifices that businesses need to build on that real estate. Having a mobile app on your customer’s device gives you a platform for alerts, news, searching and shopping. However consumers are fickle. If you app does not entertain and engage the consumer, if it does not continue to deliver them real value, they will delete it.
Building a credible app is complicated and expensive but it is just the tip of the iceberg. As in most software products the cost of the initial development is only a small percentage (historically about 10%) of the cost of maintaining the software over its useful life. In the case of mobile apps it is not only the software that needs to be enhanced and maintained, it is also the content. To maintain the attention of the consumer, new and engaging content needs to be delivered continuously. Offers, news, updates, information, education and other content that is valued by the consumer must be continuously refreshed. Large companies can afford to hire and retain a significant staff to develop a mobile app and to maintain the technology and content of that app. In this way they can constantly evolve the app and the app’s content to reflect the constant evolution of their market, their customer and their competition. The investment required to do this right is staggering!
This is a severe handicap for the SME. Building and maintaining a mobile app is well beyond the resources of all but the largest SMEs. Furthermore, updating content to continue to engage and retain the consumer is technically very difficult and few SMEs have the requisite expertise.
Mass Customization and your Branded Mobile App
Definition: Mass Customization is the customization and personalization of products and services for individual customers at a mass production price.
For the SME, the key to creating an effective and engaging mobile experience for their market lies in the emerging technology of mass customization. The costs of initial and ongoing development are shared by many SMEs in a similar industry segment so that each can afford a technical solution which none could afford on their own. Mass customization further allows each app to reflect the brand and values of a specific enterprise. A branded static app is not, however, enough to win in the attention economy! To retain the consumer’s engagement and loyalty, the app must evolve and provide richer and deeper value over time. This requires a long term partnership with the app provider. Furthermore, the app must support a simple and low tech solution enabling the enterprise to continuously refresh the content. Continuous app and content updates are the “attention economy currency” required to engage the customer, reinforce the value of the relationship and sustain the customer’s loyalty and attention.
The SwitchCase Solution – Branded Mobile Apps
The SwitchCase Group has developed an architectural solution to cost-effective mass customization of powerful and compelling branded mobile apps.
For each industry, a specific Framework is created that supports the features and capabilities which are required to build an engaging experience for the consumers in that industry. That Framework is then continuously updated to add new features and services as the industry and the consumer’s expectation evolve. The Framework is built so that, for each enterprise, a specific branded apps is published for iPhone, Android and mobile web consumers.
Underlying the Framework is a sophisticated Content Management System (CMS) with a simple but powerful user dashboard. The CMS allows each enterprise client to configure and control the branding, the look and feel, the suite of services delivered, the unique content and the consumer experience delivered by their branded app. When their unique configuration and content is loaded into the framework, the result is published through the appropriate app stores. That enterprise can now offer a completely customized and uniquely branded app for their consumers.
Once the app is published, the enterprise can (and must) continuously update the content of the app, delivering alerts, news, updates, music, videos, new products, and new services on a regular basis. The CMS dashboard provides a simple and powerful tool for content updates. No special technology expertise is required.
The SwitchCase Commitment
Deliver a powerful, compelling, and unique branded app for each client at an affordable price.
Continuously invest in and update the app Framework and CMS so that the app remains compelling to the consumer in a changing and dynamic environment.
Provide a powerful and easy-to-use dashboard that allows the enterprise to retain their customer’s attention and loyalty by constantly delivering new value.
Enable the SME to compete and thrive in the new Attention Economy.
Gallus Golf provides branded mobile apps and social software for golf courses. Our products enhance the golf experience and encourage golfers to share that experience in order to attract new customers and book more rounds with existing customers.
Jason Wilson, who has spearheaded our latest venture, Gallus Golf, has written an eloquent description of Real Social Marketing. Most companies these days think of Social Marketing as having a Facebook page and a Twitter account. Real Social Marketing is much more than that. It’s about getting your fans and your customers to talk about you. Jason’s article is about Gallus Golf, but the concept of Real Social Marketing applies across the board.
We are not the only firm you can partner with. We do not believe we are right and that other firms are wrong. We are a group of talented and committed people who share a set of values, a vision on how to enable entrepreneurs and a commitment to a collective future. Are we right for you? Ask yourself a few basic questions.
Do you share, deep down in your soul, the SwitchCase Values?
- Live and act with integrity.
- Create something of enduring value.
- Work hard, play hard and have some fun.
- Work with people you like and believe in.
- Make money and share it with everyone involved.
Do you have a deep passion about what you are doing and do you want to commit yourself to creating an enduring enterprise around the realization of this passion?
Does your business roughly fit the parameters outlined in the description of our partner model?
If the answer to these questions is yes, then the SwitchCase Group offers a unique opportunity. We bring significant talent, energy and experience to your venture. If you become part of the family we will work as hard as you do to assure your success.
Meet us and decide for yourself.
The most important characteristic of our partners is that we have a shared vision. At the SwitchCase Group we partner with entrepreneurs who want to make a long term commitment to building an enduring enterprise.
Businesses we sponsor usually have the following characteristics:
- The business should be launched with a modest amount of capital (< $1M) in a year or less from an investment.
- The business should have a realistic opportunity to create and dominate a meaningful market. We are looking for markets where the TAM is in the $50-$100M range. Business is increasingly moving to a winner-takes-all end game. We believe it is better strategy to seek to dominate a small market with minimal attention from the deep pockets than to go to war in the big markets. Risks are lower, investment is lower and probability of success should be significantly higher. We plan to succeed every time!
- The business should benefit from and leverage the human capabilities of the SwitchCase Group. We need to be involved in order to both receive value from and provide value to our partners.
- In general we will pass on businesses with complicated capital structures. We prefer businesses where the principals and the SwitchCase Group comprise the entire ownership group. In this way we create and sustain a shared vision and common goals.
- The 21st century business model is a lean organization with significant outsourcing of non-core activities to strategic partners. This provides the lowest costs and the maximum agility. We seek businesses that embrace this model.
“Know the rules so you know when to break them.” – The Dalai Lama. We want to work with really great people. The rules come second.
Partnership + Capital. There are three significant differences between Partner Capital and Venture Capital.
We Are Long Term Investors
Venture Capital is founded on a model where the investors purchase shares in a venture. They then drive that enterprise to a liquidity event so the shares can be sold or distributed. Venture funds are closed-end funds with, typically, a 10 year life. They are required to return capital to their investors within that 10 year window. As discussed elsewhere on this site, this drive to liquidity creates cultures and behaviors that are destructive to the long term interests of the other stakeholders of the enterprise.
Partner Capital is a long term investment. The SwitchCase Group is an open-ended investor. We are interested in businesses which grow revenue and generate strong free cash flow. We want to hold onto that investment indefinitely. We are owners, not traders. We are more like a mini-Berkshire Hathaway than like a mini-Kleiner Perkins.
We Build Deep and Broad Partnerships
SwitchCase Group is building a family of enterprises not a portfolio of shares. Our principals are engineers, marketing executives and experienced business leaders. We roll up our sleeves and go to work with you and for you. If you need development support to build your product, our engineering team will provide it. If you need help building your business strategy, our business executives will attack it with you. If you need to land your anchor accounts, our marketing executives will link arms with you and take your product to market. Our support reduces your need for capital, shortens your time to market and creates a lean and flexible staffing model for your enterprise.
We Nurture a Shared Vision
The SwitchCase vision is not new. It is a rediscovery of an old model; a model where entrepreneurs and their partners built enduring institutions instead of buying low and selling high; a model where the objective is to dominate important markets rather than simply to get rich. We want to make a difference.
Just in time for SuperBowl Sunday, the NFL has enlisted the help of the ICE Homeland Security to seize and shut down a number of websites that host links to live sporting events. Among the victims were two of my favorites: atdhe.net and ChannelSurfing.net.
I rely heavily on these sites as an Internet-only TV viewer and I’m happy to report that all services have been restored and can now be found on atdhenet.tv and ChannelSurf.eu. Come Sunday you will also be able to watch the game on Veetle.com, uStream.com, Justin.tv or simply by following my good buddy @Greg_Punzo on Twitter.
My point is this:
THE NFL CAN NOT WIN!!
Even with the help of the government, whack-a-mole enforcement of copyright infringement has proven to be ineffective, from Napster (1999) to WikiLeaks (2010). A new approach is needed!
THE ROOT OF THE PROBLEM
Why are people illegally streaming NFL games over the internet? The answer is because they have no alternative. TV subscriptions are declining in favor of internet only connections. In Q3 of 2010 Comcast lost over 275,000 subscribers, Time Warner dropped 155,000, and satellite viewership declined by 119,000.
These numbers are going to continue to grow and these people are going to want to watch football. Until the NFL offers a legal and reasonable alternative, atdhenet.tv will continue to exist and the piracy of football games will continue to increase.
THE NBA & NHL MODEL – CONTROLLED SERVICE
Both the NBA and the NHL offer an online streaming package. The pricing varies depending on when you sign up, but a full season of NBA League Pass will run you about $180 while NHL GameCenter costs upwards of $160.
Both League Pass and GameCenter are “controlled services” meaning that they are entirely created and managed by their respective leagues. The league sets the price, chooses what features to add, remove, enhance and ultimately defines the user experience.
League Pass and GameCenter have some cool features you won’t get through your local cable provider, including: live stats, pause, rewind, archived games, chat, and with League Pass you can watch up to 3 games at once.
Admittedly, these service are designed for die-hard fans. They cost a lot of money and do nothing to combat piracy as evidenced by the fact that every NBA and NHL game can still be found on atdhenet.tv.
The NBA and NHL have half of the equation right. They are offering a legal online alternative. The problem is that it isn’t reasonable for the casual fan to subscribe.
A RADICAL NEW APPROACH – CONTROLLED DISTRIBUTION
SuperBowl XLV is projected to net the NFL $213 million in advertising revenue with 95 million viewers. This means that come Sunday your eyeballs will earn the NFL $2.25. If the game lasts 3.5 hours you are worth $0.01 per minute. However, the hundreds of thousands of online viewers, like me, will be worth nothing.
Now imagine that the NFL licensed their content to various online services for $0.02 per viewer minute. Instead of atdhenet.tv you would get hundreds of websites competing for your eyeballs legally! The quality and reliability of the broadcasts would go up, advertisers would leap at the opportunity to bring you to their site for the game, and the NFL would double what you are worth to them. Win! Win! Win!
This is “controlled distribution.” Under this model, instead of controlling the user experience, the NFL simply controls who can broadcast their games online and charges them appropriately.
Technologically speaking, this is not far-fetched. Internet steaming platforms have reached the point where live broadcasters now know exactly how many people are watching, from where, and for how long. Politically speaking it may be a different story. In the mean time, I’ll see you Sunday on atdhenet.tv.