Whilst in Arrakis

The Future Will Be Better Tomorrow

How to develop billion dollar apps

 

1. Core apps vs. combo apps

My theory goes like this: iOS started as a super early adopter device and the core apps (phone, contacts, email, calendar, etc) were simply a logical step from similar applications that have existed on smartphones for a long time, arguably with a nicer UI.

Fast forward 6 years and the iPhone brand has sold over half billion devices with an additional 200m iPads. The core apps have barely evolved compared to what has happened to the apps that are present in the App Store. There has been significant improvement in the default iOS UX but that’s just a pretty overlay on top of the same actions [1].

By catering to a mass market Apple has left plenty of space for app developers to take hold in their core apps.

2014-07-26 06.58.53

Have replaced most core apps the latest being Humin that replaced the Phone app. Wish there was an alternative for Music

 2014-07-26 23.15.11

Humin really blew my mind and was looking at the common theme behind me using Sunrise, Gmail etc instead of the old ones and the answer is about combos. [2]

 

2. Enter the combo apps

A combo app is an app that aggregates data from different applications to perform its functions, and then adds a layer of intelligence/context over it to figure out meaning from this data.

With an installed base of up to 700m the mass market is interested in basic simple usability so Apple can reach people like my parents (who get a brain aneurysm every time they have to perform a new action in software that they have not done before). This creates a race to the bottom in terms of features and leave ample space for innovation to cater to early adopters who have plenty of apps rich with data already installed on their phones.

An early example was Sparrow that would use Dropbox for storage. Most apps can now connect to Facebook, Twitter and Linkedin. Citymapper connects with Hailo, Google Maps uses Uber, Gmail uses Google Drive (whatever that is), Moves is used by all health apps and vice versa. The list is long.

What this means is that you can infer additional context form past use behavior. For example you can mine emails and FB to figure out who are your closest friends. Humin automatically filters your contacts by your current location, and then (correctly) assume that you are more likely to call people in SF when you are in SF (and additionally when it’s daytime in SF) apart from the ones you marked as favorites that are always present.

And the more these apps can be connected and the more data can be harvested from each other new forms of service can be provided to the user.

Enterprise communications (whether IM or videoconference) still suck. Photo management blows as we never imagined we could have so many photos. Contacts are a mess (maybe Humin will prevail and fix this), Pocket is not yet fully integrated in other apps or in iOS. Moving unstructured data from one device to another is still a Wagnerian nightmare.

Moreover with HealthKit you are going to have a new dimension of data as well where you can link biological responses to actions and again down the road you could infer the status of a person when certain actions are taken, cluster them and build a predictive model on top.

My final point is that core apps represent the biggest opportunity. Samwer famously wrote: “there are only 3 areas in ecommerce to build billion dollar business: Amazon, Zappos and furniture” and I believe there is an analogy in mobile. Only here we are talking about a twenty  fucking billion dollar opportunity [3] for those lucky ones that can replace a core app and build a business on.

 

TL;DR: combo apps are the future and you have plenty of shitty iOS apps (Yahoo! Stocks [4], Clock, communications) that you can re-invent. The combo can also create new class of apps that we have not discovered yet (fucking/dating/marrying, professional services, freecycling, knowledge dissemination and tutoring. The list can be pretty long.) Replace one core app and your company will be bigger than Iceland’s GDP.

 

PS. this idea of leveraging existing data and manipulating it and presenting it in new ways is nothing new. Y Combinator and 500 startups rely heavily on this theory while choosing their investments. Dropbox and Airbnb are prime examples. Neither requires a data entry sales force to populate or maintain any dataset so it’s enormously scalable and easy to kickstart at the same time.

 

-Notes-

[1] Apple has put effort where leverage is. So focus was (correctly IMO) in improving developer tools to make and sell apps rather than say improve the phone app which might be irrelevant in 5 years.

[2] Yes, I do have Dylan on speed dial ahead of my family. Don’t ask. It’s got something to do with Batman anyway.

[3] Whatsapp, I’m looking at you, without even a desktop app.

[4] Yahoo! Stocks. I can’t believe that SUCH A BUG-INFESTED TURD has been allowed to be on the default page of iOS and every other alternative has been built with the same shitty idea that people want a fucking Bloomberg terminal on their phone with the same fucking usability of a fucking Bloomberg terminal (hello ’90s!)

How Microsoft contradicts itself

Burning-Platform

“Microsoft is the productivity and platform company for a mobile-first and cloud-first world, and games are the single biggest digital life category in a mobile-first world.”

Maybe it’s just me but the first part of that sentence is the exact opposite of the second half. Mobile-first and productivity therefore consoles for your living room with games.

Microsoft is a software-first company that caters primarily to enterprise customers. Games and online ads are a distraction on the bottom line and not a strategic objective. Not to mention that they have nothing to do with productivity.

Microsoft is shutting down its non-game content studios after only a few weeks of operations as part of its layoffs.

I have said this many times, Microsoft should merge its Xbox division with Valve and in the process acquire a stake the largest independent app store in the market (Steam). This would enable them to focus on the corporate and services market while having the games managed by a third party that could be free to innovate without having to worry about other Microsoft divisions (apparently infighting was a big issue at Microsoft during the days of stack ranking).

It would automatically give them monopoly status in the following markets: PC gaming, games distribution and the console market. While killing Linux gaming. Not bad.

 

Kentucky Road Zero

2410783-2013_01_10_00001

So,

I bought Kentucky Route Zero[1] when it first came out. Then bought it again on Steam because I had no idea where the files were. Knew about the art, gameplay and the praise it got[2] – but never actually got around to play it until tonight. I am in awe. And that phantom limb I got after the ending of Lost[3] doesn’t itch anymore.

 

[1] KRZ was originally a two-man Kickstarter project that raised $8k in funding and received no attention from the gaming press.

[2] Rock, Paper, Shotgun named KRZ as its Game of the Year for 2013. Had Bioshock Infinite been made with a more RPG-ish, procedural gameplay I would not felt so conflicted here.

[3] Well more like after the 2nd season.

Stephen Elop in charge of games at Microsoft

 

I am officially wrong about my prediction of Gabe becoming the CEO of Microsoft. Stephen Elop was put in charge of Nokia so he could sell it. Maybe his mandate at Microsoft is the same. If I was them I would offload the Xbox to Valve and get their software distribution platform in return.

24 Hours after Landmark

Valve and Microsoft

Image

“If you wait by the river long enough, the bodies of your enemies will float by.”
-Sun Tzu

So,

I once blogged that by Q2 2014 Microsoft would have acquired Valve and that Gabe Newell was a serious contender for the top job at the world’s largest software company. Not quite.

Back then I did correctly assume that Ballmer would be pushed aside, but MSFT’s disorganization (apparently a new CEO could be announced “soon”) and rapid deterioration of their core business took me by surprise. My expectation of Valve being acquired is being turned upside down, with now looking likely that Microsoft might look to offload their Xbone to Valve or to another player (but at this point it seems that the move of Steam onto Linux hardware is going well, so Valve might not be particularly interested in loading its balance sheet with hardware that competes with its partners, even if it would certainly come with a big dowry as well.)

Microsoft’s cash cows are under attack. Windows 8 is not being adopter by consumers and (more importantly) shunned by developers. Unlike Apple or Valve they do not control any meaningful share of the software distribution market. Their online units have been losing $1bn/year since forever. Their mobile OS relies on paying developers to port second-rate apps since nobody uses it. PC sales are falling fast because users are switching to phones for their productivity. Consumers do not want to interact with a Kinect. Microsoft fought the war on for the living room without realizing that the battleground was outside, in the mobility of computing and not shifting from a chair to a sofa talking to HAL9000.
One of their biggest success is patent licensing to Android. It’s a big business, but it’s not a $300bn company.

Blackberry had its best quarters when it was no longer relevant. The next six quarters for Microsoft could be incredible. Not sure what comes next for them.

Microsoft sold 3m Xbones in 2013. Steam has 7m concurrent users and 70m accounts.

No large developer can afford to make a top franchise exclusively for the Xbone/PS4. The numbers just do not add up. So they will never be able to have a product that Steam doesn’t have as well that drives hardware adoption.

Nintendo this week slashed their sales forecast by 2/3rd for the console and by half for the 3DS. Basically they are done for in the hardware business (at least globally. They might keep some devices for the Japanese market).  As a comparison Apple sold 173m iPads last quarter. There are 150 million smartphones in the United States only.

Will console units hit 100m units globally and then stop? If that is the case then would the only solution for Sony and Microsoft be to move away from hardware and offer a software client a la Steam? What is their mobile play?

Mini Left 4 Dead 2 review

Image

 

Infinite ammo. Infinite zombies. Zombies that die with a single shot even if it’s a shoulder hit. Hotel corridors with magic smokeless fire that you cannot see through. There is not a single fire extinguisher in sight. And the fire is magically localized, does not spread, and is even present in the fire escape stairs where according to logic there shouldn’t be anything that can catch (or sustain) fire. You can’t climb over obstacles. You can only do baby jumps.

Nobody will call you out because your magic castle is made by the wrong type of bricks, but suddenly in a hotel you notice there are no fire extinguishers.

Bittorrent and the meaning of ‘malware’

This is an email exchange between me and Bittorrent. Enjoy. I removed last names and other personal details.

Guys,

maybe was not clear enough before.

You engage in scumbaggy deceptive practices and hide behind the thin veil of but it’s legal and others are doing it. I am sure nobody at the senior level of your customers approved ads based on semi-malware and blackhat SEO practices. [1]

On top of this lack of strong consumer protection laws does not automatically translate into a license to be a shithead (or partner with one that does) with somebody else’s search functions. The fact that an antivirus does not flag it up means jack shit. Conduit is indefensible, no user would ever agree to install that if they understood what that piece of software does.

We do not engage in dark patterns and deceptive, unethical practices, and avoid like the plague those who do (i.e. you).

So in short, fuck off and die.

-Rodolfo

PS. this thread is now posted on my blog - if you really feel compelled to respond (but please don’t) do so in public and not on my email. I really do not want to hear from you ever unless it’s a TechCrunch article that announces you stopping doing this shit.

On Mon, Nov 18, 2013 at 8:19 PM, John  <@bittorrent.com> wrote:

Hi Rodolfo,

We don’t peddle Malware.  While it is true that we work with Conduit as a search partner, we QA every advertiser that we choose to promote on our network.  Our team verifies that the content is legal and runs against an anti-virus to see if viruses come up.It should also be noted that other torrent clients like Vuze also work with Conduit and other search partners.  I state this because if you look at the Vuze client, you’ll notice that they’re advertising [x] in their “games” section, and your project is with [x].

While Vuze is a great product and a good torrent client, BitTorrent owns 80% of the torrent client market.  So that’s why reached out to you and believe that a meet at [x] would be worth your time.Let me know if you’re available.Thanks,John

 

John email: @bittorrent.com cell:     Skype:LinkedIN

On Mon, Nov 18, 2013 at 11:15 AM, Jason  <@bittorrent.com> wrote:

———- Forwarded message ———-

From: Rodolfo Rosini <@.com>

Date: Mon, Nov 18, 2013 at 2:58 AM

Subject: Re: [x] – Let’s Meet

To: Jason  <@bittorrent.com>

Thanks. We do not work with companies that peddle malware.

http://forum.utorrent.com/viewtopic.php?id=141506

On Mon, Nov 18, 2013 at 8:06 AM, Jason  <@bittorrent.com> wrote:

Hi Rodolfo,

I see that Storybricks will be attending [x]. We’d like to meet to talk about potential user acquisitions opportunities.

BitTorrent has a premium ad network that is owned-and-operated, which connects high quality advertisers to our sophisticated male audience of 170M users worldwide. We serve over 6 billion impressions/month, and run high volume user acquisition campaigns for game companies like Kabam, Kixeye, Bigpoint, and Covus Crobo.How’s your availability between the 3rd-5th?Thanks,Jason

Jason

BitTorrent, Inc.

303 2nd Street, S600

San Francisco, CA 94107

[1] Ok I can believe that one company that you list as customer did actually willingly engages in this kind of hanky-panky. That does not make it acceptable to me.

Disney Infinity not so infinite perhaps

Some numbers are out and it seems that Disney Infinity did not outperform Skylanders on the basis of units shipped (but both companies did not publish a regional sales breakdown so the truth could be more nuanced. Additionally a started kit for Infinity could run in the hundreds of dollars).

I mean yes, they have sold a million units. And imagine these were $75 units. $75m in sales is not bad. But then compare it with the crowdfunding campaign of Star Citizen that took in $26m so far and suddenly the accomplishments of a global $123bn company with the best franchises on the planet suddenly feel not quite there yet.

My argument at the time (‘Why is Disney hiding Infinity?’ - The Kernel) was that a lot of these units went to collectors in the same way Beanie Babies or Furbies sold a lot of units when it launched, only to collapse months later when the rage was over and these units went back on secondary markets at a discounted price (at least Disney Infinity make sure to “lock” your purchase to the hardware so you can’t resell a used unit without an expensive lawsuit in a country with strong consumer protection laws). Sure, it made money but it was never organic demand and sustainable growth.

I dug a bit into Amazon’s reviews and they seem that the jury is still out if this game will be a billion dollar franchise for Disney that can glue their (successful) transmedia activities with video games.

Here’s the Amazon US aggregate reviews:

Image

And here the Amazon UK reviews:

Image

And these were the best PS3/Xbox ones. The Wii reviews were actually worse.

The most striking example of the current state of the game came from this review from one of Amazon’s Top 1000 reviewers:

“The whole effect is of a poorly executed, rushed game, with a rapacious commercial model which fails to deliver upon the promises made by its visual design and the history/quality of the intellectual property used.”

Ouch.

Android piracy is the issue

(In my opinion) Android piracy of (games) is the (biggest) issue (between piracy and discoverability).

Wired ran an op-ed last year about the issue of Android games and piracy. Since then I have spoken privately to several game companies that published simultaneously on iOS and Android.  According to them the numbers are the same: piracy on Android is 80-90% and the revenues on Google Play are a fraction of those on iTunes. And here’s the kick, even completely free apps are pirated.

Discoverability is not a hard problem. It’s just an issue of costs and virality. But pirated games cause greater problems than just loss of revenues. Multiplayer games need to address cheating clients, logs need to be scrubbed because the data coming from pirated games skews the picture. I know of a widely used games analytics company that is not able to remove pirated clients from their logs thus gimping their service.

Poor discoverability is a tax on installs but Android games piracy is a tax on creativity that limits the types of games you can make.

UPDATE: Tim O’Reilly responds

Follow

Get every new post delivered to your Inbox.