5 Tech Predictions for 2013: Apple TV, Android for Desktops, Windows 8 Fails and More

Tags: future, predictions

It’s end of the year, and I’m a big betting man :) . I’m therefore making a potential fool out of myself by predicting some things that I think will take place in the tech world in 2013. All of these are related to big companies, so you can call this the “Tech Giants Edition”. And as always, I’m willing to admit I was wrong :) .

1. Apple will release a fully net-based TV

After Tim Cook said that TV is an area of “intense interest” for Apple, an Apple TV is a given. The TV is the only screen that Apple doesn’t sell yet, and the TV industry is ripe for disruption.

Expect Apple’s TV to be fully net-based, with everything streamed off the cloud. It won’t have a traditional TV tuner, but instead streaming channels from the familiar stations. And there will be apps – many, many apps – which will make TV the next big app ecosystem, and interactive TV reality once and for all.

The interface will be novel, whether gesture, voice, touch or a combination thereof, and might also control other devices. The device will be slim and gorgeous, as can be expected. It’ll launch in the US first, and because of the local content deals will take long to reach other markets. It’ll also be much more expensive than other TVs, which won’t deter sales one bit.

2. Microsoft will release a phone

Microsoft is becoming a hardware & software company, and fast; it seems Apple’s approach of building “the whole widget” has won Redmond over. Conventional wisdom says that Microsoft won’t release a phone as that would anger its manufacturer partners, such as Nokia and HTC. But they already released the Surface tablet, and did exactly that with the PC manufacturers.

So next year, expect Microsoft to release a Surface-branded Windows Phone, erm, phone. That is, unless they acquire Nokia or HTC first, in which case the acquired company will release it. But in all cases there will be a Microsoft phone in stores next year.

3. Google will release a desktop version of Android

Google is dominant in smartphones with Android, but nowhere in desktops yet. The struggling Windows 8 has left a hole in the desktop marketplace for Google to fill, and it’s inevitable they will. Otherwise they’ll be giving away gains in that market to Apple.

In 2013, expect Google to release a desktop version of Android. Samsung will be an early partner, and other PC manufacturers burnt by Windows 8 and Microsoft’s Surface will flock to Android in droves.

The only alternative route to a desktop Android is for Google to continue pushing Chrome OS, their HTML-based OS for desktops, but it’s not fully baked yet. The Android app ecosystem is at least 100x larger, and having one single OS for all devices would be highly valuable for Google. And an alternative future might see Chrome OS merge with Android, but that’ll take longer.

4. Microsoft will have to admit failure with Windows 8

Windows 8 and it’s confusing interface has received enough flak that Microsoft won’t be able to dodge it anymore. Windows 8 is a bold and beautiful experiment, but the separation of the desktop and “Modern” interfaces will prove to be too complex for users to handle. If holiday sales for 2012 continue to be disappointing, the company will soon have to admit failure and revise course – at least to an extent.

Microsoft won’t change the Metro (“Modern”) UI completely, but they’ll revise it significantly with their upcoming “Blue” release, to make it more familiar to long-time Windows users. Expect the Start menu to return, at least in some format, and the most maddening aspects of the OS to become less confusing.

These redesigns will in turn appease businesses, which will start migrating to Windows 8.5 or 9, whatever it’s called, in 2013. Also, Microsoft will move to a yearly launch schedule with Windows a lá Apple, a long-expected move.

5. Apple will redesign the iOS user interface

The core of Apple’s iOS hasn’t changed since 2007, and it’s long overdue for a transformation. In a recent Apple management shakeup, revered design guru Jony Ive was made head of all user interfaces at Apple, both for hardware and software. With Ive’s new responsibilities, iOS will most likely undergo a significant redesign starting from next year’s release.

Expect the much-derided skeumorphism (design that looks like real-world items) to disappear, to be replaced by something sleeker and smoother. And expect the interface to become more “live”, a lá Windows Phone 8 – I’m looking forward to the Weather icon showing the actual weather. While we will see the first elements of this redesign in 2013, it won’t be completed until the next year, as it’s a longer process.

(Also, expect Apple to launch a Retina iPad Mini – but it’s such an obvious one that it’s barely worth mentioning.)

Enjoy 2013!

For me & Planetify 2012 has been a great year. As for my own resolutions, I promise to blog more actively in 2013.

Thanks for reading, and have a great New Year!

–Pasi

Key Lessons for Online Startups: Advertising Can’t Be Your Only Business Model

Tags: ad sales, advertising, globalization, lessons, monetization, startups

This is Part 2 of a series of lessons for online startups, derived from my coaching and advisory work in Planetify and in Startup Sauna. For more, read the introduction and Part 1, Build One Service for All Devices.

No matter how much venture funding your startup has, some day you’ll need to generate revenues. Whenever talking to a startup, the most interesting question is thus always “what’s your business model?”. There are a couple of answers to that question that I dread, and the worst answer of all is “we’re going to sell advertising”. In this blog post I’ll tell you why, by outlining the main problems in the complex field of online advertising.

Whether you’re a website or a mobile app, there are three main ways to make money through online advertising:

  • utilize ad networks
  • make the ad buying automated and self-serve
  • sell ads yourself directly to advertisers.

 

Using ad networks such as Google AdSense, Apple iAd and many others is easy, and seems to many people like a no-brainer: “we’ll just add the ads to the site/app, and money will start rolling in”. And this is true; ad networks will generate revenue without any real involvement from you. However in practice, the money from ad networks will rarely be enough to sustain your business, even if you have massive traffic. Anyone who’s ever been in the Google AdSense program will tell you that yes, it’s nice to have the additional revenue and it’ll improve your margins, but in most cases the money is not enough to cover your whole operation.

Another way to do ad sales is making it self-serve and automated. It seems logical that in this day and age, you shouldn’t be forced to manually sell the ads; instead the advertisers should just come to your site and buy the ads themselves. Both Google and Facebook base their whole business on this, and others like Twitter and Foursquare are also betting on self-serve. However automated ad sales requires massive reach and brand recognition. If the advertisers don’t know about you, they won’t be there to buy ads; it’s as simple as that. And if you’re a small startup that few people know about, it’s unlikely that you’ll be able to make self-serve advertising bring in enough money – perhaps even to cover the investment into the self-serve system.

Currently the only way to really make money with online advertising is selling the ads yourself, with a sales team that talks directly to advertisers. This is the way most traditional companies  such as publishing companies and entertainment businesses work, and if you have a great sales team there’s no reason this wouldn’t work for you. The problem for most startups is that it’s extremely costly to create a global ad sales team. While it’s easy to sell a couple of ads or sponsorships in your local market, to generate real revenues you would need local representation in all of your key target markets, which usually isn’t feasible. For most startups this is something that might happen years down the line, but won’t be financially possible before you’re a respected brand; you won’t be able to sell enough to cover the cost of the team.

Because of the above, successful ad sales driven online businesses tend to be either well established local players, or very large global companies. Right now there isn’t much middle ground. If you’re a local player, you might be able to make ad sales work for you, but then you might not be interesting enough for investors. And if you’re a startup targeting global markets but not big yet, you will have a hard time running your business on ad sales alone. It might be that this changes over time as online ad businesses evolve, and that would certainly be something to hope for – but it’s a tough nut to crack.

To summarize: It’s extremely hard to make online ad sales work as a primary business model. Selling advertising is an inherently scale-based business, i.e. to make money with advertising you need to be big. REALLY big. There are few global companies that successfully thrive on ad sales, such as Google and Facebook, but they are the exceptions, and it’s unfortunately most likely your company won’t be as successful. Ad sales can work as an additional revenue source, but if you ever want to be profitable, you shouldn’t rely on it to sustain your whole business.

Key Lessons for Online Startups: Build One Service for All Devices

Tags: apps, html5, lessons, mobile, responsive design, startups

This is Part 1 of a series of lessons for online startups, derived from my coaching and advisory work in Planetify and in Startup Sauna. For more, read the introduction and Part 2, Advertising Can’t Be Your Only Business Model.

As you’d expect, most of the startups I work with are building mobile apps. The monetization of apps is vastly easier than anything you could build on the web, and thus the lure of the App Store is great. Conversely, I still see a lot of startups that have a desktop website only, and take mobile as an afterthought. Both approaches are however inherently risky.

The main question for any online startup is: how can I be present on all devices without using all of my money? Many startups end up building multiple versions of their service, such as an iPhone app, an Android app, a desktop web version and a mobile web version. This is all good until you realize that your business isn’t working, and need to add a feature or modify something. At that point your development costs skyrocket, as you need to simultaneously support all of the different versions, and you might run of money before you get the product right. I’ve seen this happen multiple times.

What you should do is build one service that offers the same functionality on all devices. It’s not enough to have a mobile app or a desktop website; you should have both. To achieve this, you should build your app with HTML5. You should offer the app on the open web whenever possible, and also “wrap” your website into apps using platforms such as PhoneGap and AppGyver (whom I’ve been advising, disclaimer). If you need to add native code, only add what’s absolutely necessary; use HTML for everything else, and consider native code an exception.

Most importantly, use responsive design, which means that your HTML5-based user interface scales to whatever device the user is using. You’ll instantly have a presence everywhere: on desktop computers, on tablets and on smartphones. The practical upshot is that you’ll be serving all of your potential audience, not just the portion of it that happens to use a certain device. Responsive design will add 20-30% to your initial design costs, but you’ll be thankful later, as your ongoing design costs will be minimized.

There are plenty of people that’ll tell you that HTML5 “just isn’t there”, and doesn’t offer the necessary bells & whistles. In many cases this is true: HTML5-based games are still a risky proposition, and hard to develop to an acceptable user experience level. However for most purposes HTML5 is good enough, and developing on HTML5 will make it easier to turn a profit some day. While Facebook is able to build a native app, they have the cash to do it, while you don’t. And even if you did, you shouldn’t waste it on native apps unless you absolutely have to.

Key Lessons for Online Startups: Introduction

Tags: lessons, startups

I’ve been working with startups through Planetify for quite a while now, consulting and advising on how to grow their businesses. At the same time I’ve been coaching earlier-stage startups in Aalto University’s Startup Sauna accelerator program; starting next week I’ll be scouting & coaching the best startups in Europe and China for the fourth time running.

Through Startup Sauna and my own advisory work I’ve seen dozens of online & mobile & gaming startups, and have noticed how they share many of the same challenges – many of which have clear & simple solutions. I thought it would be high time I collected these solutions into a series of blog posts called “Key Lessons for Online Startups”, which I’ll be publishing here on Planetify.com in the coming weeks.

The following posts are now live:

To get notified of new posts, follow me on Twitter - thanks!

Different Business Models for Different Regions? Case TheOnion.com

Tags: adaptation, businessmodels, payments, subscriptions
The Onion's paywall dialog


I’ve been a big fan of the satirical news site The Onion ever since 1998, when they announced that Microsoft had patented ones and zeroes. The site used to be free, but this month The Onion introduced a paywall. Using the “metered” model originally popularized by the New York Times, you can now only view 5 articles per 30 days for free; beyond that you need to pay up $2.99 per month.

What’s most interesting about this is that The Onion’s paywall only applies to visitors from outside the US. Americans can therefore continue to enjoy the site for free, while everyone else needs to pay up. As you’d expect the distinction is made via IP address detection.

TheOnion.com is a darling of social media heavyusers and a highly viral site, with more than 3 million Twitter followers. Despite the universal appeal of the content, 76% of The Onion’s 4 million monthly uniques come from the US. As a free site The Onion’s business has been based on advertising, sold through their US office mainly against the impressions created by their US visitors.

It’s very hard for any global online business to survive solely on ad revenues, especially for smaller properties like The Onion which cannot rely on self-serve ad sales systems or ad networks alone. For The Onion to fully monetize their international traffic would require building a highly costly international sales force, which makes their international traffic far less valuable for ad sales. While the new paywall will surely reduce page impressions from international visitors, as long as even a small proportion of users end up paying, their revenues will most likely increase.

Following The Onion’s example, should you introduce region-specific business models for your online or mobile business? This question is one that f.ex. many traditional massively multiplayer games companies have faced when porting their products over to China and South Korea, adapting subscription models into micropayments for those markets.

My answer is that you should only adapt your business model locally it you can do it profitably. Creating a regional business model is going to add significantly to your running costs through added complexity. While you might achieve higher revenues in some of the local markets, it’s very likely the added costs will eat away your margins on the global level. If you feel confident that you’ll be able to operate your global business profitably even while adapting your business locally, then it might be worthwhile. Otherwise, as a general rule you should not add complexity into your business model from regional adaptations.

The Onion’s solution is quite elegant, and one which I haven’t seen implemented anywhere else. What they’ve put behind the paywall and sell to the end users is the exact same content as what’s available for free to US users. The company doesn’t have to produce any additional or locally adapted content; instead, The Onion’s international paywall works as an additional layer on top of the existing service. Therefore there really aren’t any added costs from the multiple business models, other than building the paywall; and typically the costs of doing that should be a fraction of the $25 million NYT reportedly spent. And as said, it’s likely the revenues from the paywall will exceed the international advertising revenues.

The Onion says that the international paywall is only a test, and it’s very possible they’ll expand it to cover the US also. As it stands today however, The Onion’s paywall might just be the exception to the rule: a regionally adapted business model where the benefits actually outweigh the drawbacks.

What is Planetify?

Planetify is a company focusing on helping companies grow their online businesses globally. The idea behind the company is to share experiences and help businesses avoid the mistakes that are most commonly made in their growth stage. We accomplish this by consulting, advisory and continuous strategy development.

Planetify’s focus is on online, specifically web-based, mobile and gaming businesses. The company serves clients of various sizes, from startups to larger enterprises, who already have existing products in the marketplace and are looking to expand.

Planetify operates out of Helsinki, Finland, and was founded by Pasi Ilola. Pasi is a long-time veteran in the online industry who has built multiple successful online businesses. For more on Pasi, see his LinkedIn profile.

Planetify is also a blog that focuses on the different issues companies face when expanding internationally. The intention of the blog is to share best practices on how to create global, yet profitable online businesses.

For more information, feel free to contact Pasi at pasi@planetify.com.