- Amazon.com was started with the idea that they would make money by shipping physical products. Today’s Amazon makes money by building a market place where every link that take you to a product is in fact an ad (revenue share). They make more money, not by shipping goods, but by referring customers to other goods.
- In 2008, 3 billions apps where downloaded on the Internet, most on social network and mobiles. That’s 40-50 million daily active users
- Today < 5% are paid apps, but that's ok because numbers shows that paid apps are trending up
- Average app price people pay for is the price of an iTunes song, $0.99 – $2.99. There may be a threshold where people won’t pay
- Many people have call-waiting which cost them $3.99/month, but do they even use it once a month? But you don’t hesitate paying for it again because they want the convenience of having it. Users will pay for apps
- An app economy is emerging, with lots of little companies. There probably won’t be a big winners, but if you look at the aggregate, this could be a 1 billion revenue stream opportunity, perhaps a $10 billion market cap business.
- It’s opportunity is viable, real, out there, just won’t support a large company today. A real trend that will continue grow. As Facebook grows, as smartphone industry grows, there’s going to be a need for new revenue sources to support these companies & activities.
- Telcos: as voice rates continues to drop for telcos, flat-rate data plans begin to fill in these revenue gaps
- Facebooks of the world: ad won’t support the model, need app-based economy
- Take off your US-centric lens. People in other countries may not have iPhones but they do consume a lot of data apps
- AT&T’s of the world: walled-gardens are coming down, because they are seeing the revenue opportunity. They will build their own app stores and take their 30% margin on the apps
- As iPhone prices come down, AAPL will not be able to make money from hardware, they will increasingly need to rely on revenue from apps
The above is Ram Shriram‘s technology trend prediction, from the 11th Annual Top Ten Tech Trends at the Churchill Club. I couldn’t find the transcripts from that 2-hour long debate, so yours truly had to hit the YouTube replay a few hundred times over to capture the above. Too good to not capture!
You can watch the entire thing here:
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