Nov 30, 2009
Continued thanks for your understanding as WiG postings are less frequent during my deadline crunch. I hope to have a draft of the Security chapter up by the next WiG post.
Inside the App Economy
Two year old Zynga, the parent of the wildly popular Facebook app game Farmville (as well as Mafia Wars, Texas Hold ‘em, and many other titles) is now a profitable, $100 million business. At 60 million players last month, Farmville now hosts roughly 20 times the actual number of farms in the US. The game’s $5 virtual sweet potatoes alone brought in $500,000 in just 3 days. These ‘cloud-delivered’ games can squirt out bug fixes, updates and new features each time you log on. They spread virally. And they appeal to a wider swath of the population looking for a quick, casual gaming fix rather than the full-on commitment of World of Warcraft. While Zynga offers its roughly 500 employees Googly perks like an on-site masseuse and free food, others are also ranking the in dough. That goofy T-Pain iPhone app? A million dollar business! The market looks so tasty that EA bought app game firm, PlayFish, for $300 million (plus a $100 million earn-out). iTunes app downloads are now over 2 billion, and while Kleiner’s $100 million iFund to fuel app development was an early leader, RIM now boasts a $150 million Blackberry apps fund, and Verizon promises $1.3 billion to invest in apps & related technologies. Eagles looking to get in on the App economy might take Prof. Muller’s mobile app development class this Spring.
YC-Funded WakeMate Helps You Kiss Groggy Mornings Goodbye
We knew ‘em as WakeSmart – three time entrants into the Boston College Venture competition (video here). Last year they won. And last week they launched with a coming out party on the nation’s top tech blog, TechCrunch. BC’s Greg Nemeth is on leave to start the firm (so is his co-founder, Yalie Arun Gupta – the team also won Yale’s competition just weeks after their BCVC victory). The $50 wristband / mobile phone app combo leverages a science called actigraphy to identify the optimal wakeup time. WakeMate “monitors your sleep patterns for the 20 minute window prior to that and sounds your alarm when you’re in the lightest sleep mode, which can help eliminate that groggy feeling you sometimes wake up with”. Sleep treatments are a multi-billion dollar industry, with estimates suggesting some 70 million Americans suffer from sleep disorders. Blatant plug for our students – perhaps this is a nice holiday gift for your groggy loved ones? Mine’s on order. And a shout out goes to the super-hard working BCVC team! How great to see in just our third year that BCVC has become a conduit for Y-Combinator and TechCrunch launch coverage. Way to go, all!
Google & Tivo Make a Deal
TiVo will share anonymized viewing data with Google. Google gets accurate second-by-second data on “which TiVo users of which types are watching which content at which times”. In return, TiVo will get revenue, courtesy of Google’s TV Ads service. By examining which ads people are watching, and how long they watch them before hitting fast forward or changing the channel, Google would be able to help advertisers design more personalized promotions and ones that keep user attention for longer. Important and valuable stuff, as research from our BC colleagues Adam Brasel and Jim Gips shows. A recent Wired article highlights their research, demonstrating that “many DVR users watch ads anyway, and that even fast-forwarders are exposed”.
Google Redefines Disruption: The “Less Than Free” Business Model
A post by Benchmark VC Bill Gurley and expanded on here by Tim O’Reilly are must-reads for those interested in market disruption, the ‘free’ economy, and standards. Look at what’s happened in the market for providers of turn-by-turn navigation data. Nokia paid $8 billion for the #1 firm NavTeq, then GPS-firm TomTom paid $3.7 billion for #2 data provider TeleAtlas. What’d Google do? Grow it’s own equivilent service to give away free to their partners. Google even kicked things up a notch by offering Street View. As Gurley points out, “if a disruptive competitor can offer a product or service similar to yours for ‘free,’ and if they can make enough money to keep the lights on, then you likely have a problem.” Well with $22 billion in cash, Google can do a lot more than keep the lights on. “Google’s free navigation feature announcement dealt a crushing blow to the GPS stocks. Garmin fell 16%. TomTom fell 21%.” Now who controls the dominant standard for future apps? If you’re a startup with a burn rate, will you pay Nokia or TomTom or use Google’s freebie?
Huawei Rattles Telecom Equipment Industry – Rises to #2
The Chinese networking provider Huawei has been a staple example of our class discussions on globalization for several years now, and the firm continues to be on a tear. Sure it’s easy for a Chinese firm to grow in the red-hot local market, particularly as the security-conscious Chinese government favors home-grown solutions over the stuff made in the West. But the non-China biz accounted for 75 percent of Huawei’s $18.3 billion in sales last year. Profits last year rose to $1.2 billion. Impressive for a firm many insist has close ties with the Red Army (an issue that may, ahem, raise a red flag with foreign governments). Huawei is now a provider to 36 of the world’s top 50 mobile operators, “including Telus in Canada and Cox Communications, Leap and Clearwire, a WiMax operator majority owned by Sprint Nextel, in the United States.” This year Huawei sales bolted past Alcatel-Lucent and Nokia Siemens, and the firm even scored the L.T.E. upgrade for Norway’s Telenor – a huge coup given the rollout is right in the backyard of European giants Ericsson and Nokia Siemens.
Community Relations 2.0
The folks at Harvard Business Review have given us a limited number of free digital reprints of our social media article from the Nov. ’09 issue. I’m happy to send copies to those who are interested, with the infomercial caveat that you should “act while supplies last”.