First recent findings about The hierarchy of developer needs: Creativeness, not money is the top motivator [VisionMobile blog, Aug 12, 2013] are showing quite clearly how much Microsoft is in disadvantage in the global developers community not only vs. iOS and Android, but even vs. HTML5 in general, which is already a real third platform for developers. Regarding that read UPDATE: HTML5 Vs. Native Mobile Apps — HTML5 Is Down But Not Out [Business Insider Australia, Aug 14, 2013], HIGHLY RECOMMENDED!
It is even more so as a much better HTML5 platform (than the corresponding Windows 8 subset, so called WinJS) came now to the market with FireFox OS:
- as its “first two devices hitting the market – the Alcatel OneTouch Fire and ZTE Open – the latter just launched in Spain from Telefonica for €69 ($90) contract-free including €30 ($39) of airtime for prepaid” according to p. 12 of the free Developer Economics Q3 2013 [VisionMobile, July 29, 2013] report
- and “In just a short space of time, Firefox OS has managed to amass a respectable Developer Intent share, even before devices hit the market, and while competing for Windows Phone, Windows 8 and BlackBerry 10 all of which are much older platforms, with devices in market and billions of market dollars behind them.” as per p. 24 of the same report.
Now the quite important findings from The hierarchy of developer needs: Creativeness, not money is the top motivator [VisionMobile blog, Aug 12, 2013]
What motivates developers? Is it fame or fortune? Our new Developer Segmentation 2013 report [starting from £1,495.00] addresses this questions, presenting a needs-bases segmentation model that focuses on developer goals, not just demographics. Based on data from our latest Developer Economics survey (6,000 respondents from 115 countries [FREE to download from here: HIGHLY RECOMMENDED]), this article gives you some insights from the report, discussing how the sense of achievement, not money is the prime motivator for developers.
…
Most business are resorting to traditional, textbook marketing techniques to segment developers – by technology (web, Java, Windows, Android, Apple), job function (coders, designers, architects, team leads, IT managers, CxOs), by company size, app category (games vs enterprise developers), by audience (B2C vs B2B) or by demographics (age, income, education or location).
Yet all these segmentation models are bound to fail, as they fundamentally neglect to address how developers make investment decisions in a new platform, API or SDK. In other words, it’s not age, job function, audience or technology background that influences how a developer chooses between Apple, Google, Windows Phone, BlackBerry or Tizen.
To understand the complex mosaic of developer personas we segment developers in terms of their outcomes, or what developers are trying to achieve. This is based on the Jobs to Be Done methodology, popularized by Harvard Professor Clay Christensen and which constitutes today’s cutting edge in segmentation techniques. We have backed this model with unprecedented statistical rigor and hard data, from the largest-ever mobile developer survey of 6,000+ developers.
Building on our earlier Developer Economics 2012 research work, we extracted hard data on thousands of developers in terms of their aspirations, motivations, challenges and plans in app development. We produced a unique model of eight developer segments – the Hobbyists, the Explorers, the Hunters, the Guns for Hire, the Product Extenders, the Digital Content Publishers, the Gold Seekers and the enterprise IT developers.
How do these eight segments and three clusters contribute to the app economy? More importantly, when do these segments interact with platforms?
We find that Explorers and Hobbyists, those seeking to learn, have fun and self-improve, make up 33% of the mobile developer population but only 13% of the app economy revenues. These segments prefer – more than average – BlackBerry 10, Windows Phone as a platform, as these are more often associated with experimentation and learning.
The Hunters and Guns for Hire, those seeking revenues from the app economy, make up 42% of the developer population and 48% of the app economy revenues. These segments prefer – more than average – iOS as a platform, due to the consistent revenue-generating opportunities of the platform.
Product Extenders, Enterprise IT developers, Digital Content Publishers and Gold Seekers, aiming at extending a [non-mobile] business [with apps], make up 29% of the developer population, and a whopping 39% of app economy revenues. These segments prefer – more than average – Android and HTML5 as a platform – due to the reach that these platforms offer across the entire smartphone and feature phone installed base.
… <goes to “The Hierarchy of Developer Motivations” chart, not relevant to this post, so omitted> …
Then Microsoft should take into account The evolution of handset business models: From source of profits to distribution channel [VisionMobile blog, Aug 5, 2013]
The evolution of the PC and mobile handset industry have been mirror images of each other, as both saw two distinct disruptions: a new market disruption, followed by a low-end disruption. Guest author Sameer Singh discusses how the shift from integrated companies to modular competitors will pressure hardware profit margins across the industry, leading to the emergence of a new business model, i.e. hardware-as-distribution.
The mobile handset industry has already seen two waves of disruption: A “new market disruption”, led by Apple, and a “low-cost disruption”, driven by Google and its Android platform. Each wave created distinctly different business models that completely realigned competitive dynamics in the industry. Where do we go from here?
We believe that the coming, third wave of disruption will again reshuffle the deck for all industry players. We will see growth in a new class of business models, where handset hardware is no longer seen as a source of profits, but is treated as a distribution channel for digital products and services.
… <two long sections about “Dual Disruption Patterns in Computing” and “Impact of Value Chain Integration on Business Model Evolution” which are quite important to prove the author’s prediction about the inevitability of the third wave of mobile handset industry disuption, but for us here it is sufficient for our subject to include his “Third Disruption” discussion> …
The Third Disruption: Hardware as a Distribution Channel
As there will be fewer profits left in the handset industry, a third wave of disruption is a certainty.
In the PC industry, once the dominance of modular architectures led to deep commoditization, hardware just became a distribution channel for software (the operating system and applications). The evolution of the mobile handset industry works out slightly differently. Google essentially destroyed the software licensing business model by giving the Android operating system away for free. Consequently, the cost of owning a proprietary operating system became unviable for most players (like Motorola, Sony Ericsson or Nokia) because hardware margins became severely pressured. This ensured that industry focus and profitability would accrue to the next layer of the value chain that was underserved, i.e. Google’s core business – online services.
In the PC industry, OEMs like Dell and Sony used the “hardware as distribution” approach to charge software vendors to pre-install applications on their devices and boost margins. In the mobile industry, we have seen already numerous companies follow this model to create a competitive advantage by leveraging established ecosystems. Many service companies like Baidu, Dropbox, Opera, Facebook and Whatsapp have attempted this strategy by partnering with OEMs to pre-install or use their services by default.
Another variation of this strategy, followed by services and content companies, is selling relatively high-end hardware at cost, in order to enable deeper penetration of the company’s core services. Companies like Amazon and Xiaomi compete asymmetrically with true hardware vendors in order to expand their consumer base. Both strategies have been quite successful – Amazon has expanded Kindle Fire availability to numerous countries based on strong sales and Xiaomi expects to double its handset sales to 15 million this year [to 20 million, see p. 25 of my The Upcoming Mobile Internet Superpower mini e-book]. Many more services companies like Evernote and Spotify are contemplating the low-cost, “hardware as distribution” strategy in the future. We have already seen a smartphone called SmartNamo dedicated to an Indian politician, Narendra Modi. Will we see a “Justin Bieber phone”, “Shah Rukh Khan phone” or even a “Real Madrid phone”?
Rapid commoditization will only make it easier for companies to convert hardware into a distribution channel. The tablet industry has seen more price competition than the smartphone market in the absence of carrier-driven price distortions. As a result, commoditization has been much more rapid and the “hardware as distribution” model has come to the forefront in a very narrow time frame. Low-cost tablet hardware has allowed companies like Newscorp to enter the industry with preloaded, education-focused content. We have seen similar models emerge in South Africa, India, China and many more countries. As price competition increases, commoditization pressure in the smartphone industry, variations of “hardware as distribution”, could become one of the primary drivers of profitability.
The expected shift in handset business models will reshuffle the deck once again. Companies that catch the trend early will find plenty of opportunities to create competitive advantages and thrive in the new environment. Those who miss it will be destined to fight the losing battle of “competition to the best”, which Prof. Porter calls “the granddaddy of all strategy mistakes”.
On pp. 32-33 of my The Upcoming Mobile Internet Superpower mini e-book [Aug 14, 2013] it was further noted that:
China Daily reported not less than 14 months ago that Xiaomi, China’s Apple success story?
…
The broader vision of Xiaomi, Lei [Jun, chairman and chief executive officer of Xiaomi Corp] pointed out, is to ship more than 100 million smartphones annually for one model by 2016.
“I know it (the vision) is crazy, but we would like to have a try,” said Lei. Cupertino-based Apple managed to sell more than 90 million iPhone devices last year. It is widely believed that Apple will break the 100 million unit mark this year, although it has been less than five years since the first iPhone launched in 2007.
The difference in business model was even more clearly communicated in this recent interview: Xiaomi CEO: Don’t call us China’s Apple [Reuters TV YouTube channel, Aug 15, 2013]
Aug. 15 – China’s Xiaomi has sparked a frenzy with a low-cost smartphone that may help the tech firm widen its lead over Apple in the local market — but CEO Lei Jun says it has very different ambitions.
This shows very well how the above mentioned third disruption could fundamentally alter the current state of mobile intelligent devices market. As far as our subject is concerned my three other posts are giving further clues about growing Microsoft difficulties:
Google Play catchup with iOS App Store and its way of assuring compatibility across Android 1.6 to 4.3 [Aug 15, 2013]
With Android and forked Android smartphones as the industry standard Nokia relegated to a niche market status while Apple should radically alter its previous premium strategy for long term [Aug 17, 2013] from which I include here this major chart (from myself) as well:
Watch also a recent video report closely related to that: In China smartphone market, cheap rules – and Apple suffers [Reuters TV YouTube channel, Aug 19, 2013]
Aug. 19 – Apple’s seen its market share in China dwindle as homegrown smartphone makers crank out feature-packed budget models. Could the launch of a cheaper iPhone restore its flagging fortunes?
Android to overtake the overall PC market? [Aug 20, 2013] from which I include here this major chart (from IDC) as well:
Consider also Apple and Samsung Losing Share to Chinese Smartphone Makers [China Internet Watch, Aug 7, 2013]
The high-end players like Apple and Samsung are losing share to Chinese manufacturers like ZTE, Huawei, and Lenovo, and no-name brands which are willing to make extremely cheap smartphones. As you can see in the picture, Samsung’s Q2 share in 2013 is 1% lesser than that of 2012, and Apple decreases 3.6% share, while Chinese manufacturers grow 3.5%.
Filed under: Cloud client SW platforms, consumer devices, smartphones, tablets Tagged: Amazon, Android, BlackBerry 10, broader vision of Xiaomi, commoditization, Developer Economics Q3 2013, Developer Economics survey, developer platforms, developer segmentation, Developer Segmentation 2013, Digital Content Publishers, enterprise IT developers, Explorers, Firefox OS, Gold Seekers, Guns for Hire, handset business models, hardware as a distribution channel, Hobbyists, HTML5, Hunters, iOS, Microsoft, mobile developers, model of developer segments, modern smartphone disruptions, Product Extenders, VisionMobile, Windows 8, Windows 8.x, Windows Phone, Windows Phone 8.x, Xiaomi