iPhone 5 Launch and Christmas: For Apps, The Most Wonderful Times of the Year

Like all its predecessors, the newest Apple iPhone 5 is set to make waves in the app industry.  In America alone, iPhone 5 preorders topped 2 million in 24 hours — more than double the amount of preorders it had for the iPhone 4S. Apple is known for impeccably timing its execution for big product launches and upon reflecting on the importance of timing, we’ve noticed how seasonal trends play a big role in boosting app downloads and sales. We can’t stress enough to developers how critical it is to be prepared for the Winter holiday season this year because its going to be huge!

Like clockwork – Apple app downloads and revenue jump  around two events of the year

Like the increase of sales for ice-cream in summer and ski gear in winter, mobile app downloads are also subject to seasonal fluctuations. However unlike the weather, app seasonality is controlled by the Master of the iTunes App Store universe – Apple. To analyze these trends, we studied downloads and revenue across the iPhone in the U.S. market1 and discovered some common themes.

iPhone Device releases make apps go hyper

The first boost to Apple app downloads is of course the release of next generation iDevices.  On September 12th, Apple CEO Tim Cook recently unveiled the longer, sleeker, more advanced iPhone 5 to the world. Apple addicted consumers will camp and line outside Apple flagship stores for days in order to grab the first release of coveted devices.  When the iPhone 4S was released in October 2011, downloads grew a modest 2% between October to November but revenues jumped by a strong 22%. This higher revenue than downloads growth trend signals how iPhone users are comfortable with spending more and more on apps.

Christmas is a merry time for apps 

The second sharp rise in Apple app downloads and revenues is clearly around Christmas time. Christmas or the end of the year is a time for giving lavishly and Apple devices are on many people’s wish lists. One of the most successful developers in the world, Rovio of Angry Birds, took advantage of the Christmas trend with a special Angry Birds Christmas edition in 2010 and on Christmas Day of 2011 alone, there were 6.5 million downloads across all of its games.

In relation to the app market, we classify the Christmas period being from November to January, since November to December is when device sales increase and December to January is when app downloads and sales related to those devices sales flow through.

To see the incline and decline before and after the Christmas period, we zoomed in on the period from September 2011 to February 2012 for app downloads and revenue for iPhone in the U.S. market.

As expected, there was a marked uptick in app downloads from November to December of 39% and a related 45% jump in revenues. At the tail end of the Christmas period there was a decline of  14% in downloads and 7.1% in revenue. For iPhone developers, it is important to capitalize on the Christmas spike by preparing to release and market apps in October.

Double dip app-cession

Of course the natural dips in downloads and revenues occur in-between the peaks of device releases and Christmas time. Like many other industries, the after-holiday period takes a while to wind back up to full capacity. That is why it is important for developers not to arrive at the party too late, because once February comes, app downloads and revenue will drop off suddenly.

Know the seasonal trends and get ready for them

Knowing that device releases and Christmas are two factors that consistently influence apps, app developers, publishers and marketers must prepare to take advantage of the natural trends. One strategy is to create Christmas themed games like Rovio with Angry Birds. Another strategy may be to get featured in the ads of the newest iPhone release.  To investigate the impact of the hotly anticipated iPhone 5’s market debut, we will follow up later with analysis of iPhone 5 app download and revenue trends in the coming months. For now, everyone in the app world should prepare for the Christmas and Winter burst of activity because we don’t want to say ‘We told you so!’
Notes:

1. All data The analyses and insights discussed were drawn from App Annie’s Intelligence data for the U.S. market.  App Annie takes responsibility for the claims and insights in this article which are based on this data and research. However, App Annie does not take responsibility for any actions or outcomes undertaken by 3rd parties, as a result of this article or the analyses or data contained within.

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“Capturing Investment Opportunities in the TMT Sector in Changing Times”, a Wharton Club of Beijing Panel Discussion

On Saturday evening, the Wharton Club of Beijing invited a panel of distinguished Wharton MBA alumni in the Chinese TMT investment sector to share their thoughts and insights into the exciting market. As Wharton is world renowned for their strong financial academic rigour, it is only fitting to listen to the panel about the direction of the TMT investment space.

The panel consisted of Michael Yin, Managing Director and Founding Partner of Summitview Capital; William Qu, Managing Director of Zero2IPO Ventures, Forest Lin, Executive Director of M&A Tencent Industry Collaboration Fund and Marvin Mao, an entrepreneur and Venture Partner of Morningside Capital. The panel was moderated by Kai Hong, CEO of Capvision Partners.

The US$10 Million Investment Idea

Kai posed a hypothetical question to the panel about how they would invest $10 Million into the TMT sector in China today.

Lin of Tencent said that $10 Million could buy 2-3 stage A investments of 1 Stage B investment. He also expressed his “huge belief in companies that can create new demand or enhance efficiency of an existing market that can make people’s lives easier.” He noted one start-up from the U.S. called ZocDoc as an example that helps improves the efficiency of booking doctors based on public ratings and reviews.

Yin uses a more ‘bottom-up’ investment thesis that is based on fundamental market conditions. Yin says “the trick is to understand the sector and next product cycle and identify the winner in the next 6-12 months.” Given China’s rapid economic development, sectors like online travel and job recruitment are providing attractive investment opportunities.

Mao is a strong advocate of mobile internet as he was a successful entrepreneur of start-ups like Pica and ShareWithU. Now as an investor he is using his experience to identify other high potential investments in the mobile internet space that can meet consumer demand with a solid business model. He feels Mobile commerce presents a good opportunity because it is close to cash and won’t take too long to generate revenue. Another view is to go after niche markets where big players aren’t looking. He advised to venture out into 2^nd and 3^rd tier cities of China and even rural areas to observe their behaviour and lifestyle needs. In this way it is possible to discover opportunities that are not “hot right now but will be in the future.”

Copy to China doesn’t work

Many entrepreneurs in China are asked by VC’s which U.S. start-up their business most closely resembles. It is partly this mentality of VC’s to follow U.S. investor deals that stifle creativity in China. Qu of Zero2IPO believes that copying to China exactly simply does not work. He used the example of Meilishuo and Ganji as two extreme examples. On one hand, Meilishuo looks like a clone of Pinterest, but it more quickly figured out a way to monetize shared pictures by acting as a lead generator to Taobao. On the other hand, Ganji is a classifieds clone of Craigs List in America. But with less than 30 staff Craigs List generates over US$10 Million in profit but Ganji has still not broken even with over 2,000 employees. Qu’s point is that it is not enough simply copy to China but rather adapt to China by “looking at the deep details of the Chinese market.”

Don’t be scared of the Tech Giants

As a Founder of Pica, a mobile communication app, Mao was clearly a little frustrated at Tencent moving into the space with the now dominant Weixin app. Lin of course defended Tencent saying that the Weixin team just executed with relentless focus and tenacity and this made all the difference. But the reality is that Tencent had an army of QQ Penguin followers to boost Weixin users and surpass every other walkie-talkie style app, including Talkbox. Despite the somewhat bitter history between Tencent and Pica, Mao suggested that entrepreneurs should not be afraid of giants like Tencent or Baidu because they are too big to move as quickly as start-ups. Small start-up teams are more agile, so can make quicker decisions. Moreover, in the mobile space the technical barrier of having to test across multiple mobile form factors is a common challenge for both start-ups and giants.

TMT is still a great sector to be in

Despite negative reports about the ethical financial governance of NASDAQ listed Chinese tech companies and the poor stock performance of companies like Facebook, Zynga and Groupon, the Chinese TMT investment market still provides strong opportunity for both start-ups and investors. Start-ups that focus on fundamentals of a big potential target market, strong product and team with a solid business model will always be in a favourable position no matter if investors want to invest or not. Like Lin said during the panel, companies are ultimately not created for an exit through IPO or M&A but rather to create value to customers and society.

 

 

 

 

 

 

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360 VS. QQ War Starts Again, And They Just Do Not Want To Stop

It has been almost two years since the first clash between Tencent and Qihoo360 started. In case you have lost some previous plot as I did, please look it up on Wikipedia or on this blog. The boring news for today is, they are suing each other again!

Previously on 360 VS QQ War:

Tencent sued 360 for the “QQ Bodyguard” software which was released on Oct 29th, 2010. Tencent claimed that many functions of this software including “Accelerate your QQ”, or “Healthcheck QQ” are “damaging and violating the functions under the cover of helping users”, and are “encouraging users to delete some plug-in services, and replacing some ads on QQ’s interface.

So Tencent asked the defendant company to stop the vicious competition and apologize publicly with RMB 125million compensation. However, 360 refuted that “over 50% users are not willing to see ads inserted in IM softwares according to a ’2003 China IM Market Research Paper’”, and thus “QQ Bodyguard is doing something catering to the benefits of the consumers.”

The result is that currently the “QQ Bodyguard” is not available on Qihoo360′s website any more.

Note that this is just one of the many disputes within these 2 years and there are still many cases unsettled and unsolved.

Even the clashes between the two have been very complicated and interweaved, they can still find out something new to fight against each other. The newest case will be called in court on September 18th in Guangdong province. This time, both sides demanded compensation claims.

This August, Tencent first handed over a document named “The value assessment of the brand damage of ‘QQ’” during the evidence exchange part, in which the company claimed compensation of RMB 734million for the brand damage caused by 360. And the other side surely does not agree with this report, and doubted that, “It is unacceptable, and it has clearly violated the objective reality and professional ethics.” Accordingly, Tencent is now working on an assessment again, the number listed there might be smaller than the first one though.

As a response to Tencent’s claims, 360 soon sued Tencent for anti-monopoly (that Tencent is making use of its market dominant place and forcing users to uninstall Qihoo 360 products) and the compensation required is RMB 150million.

[image credited to gadgetsrepublic]

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SmartMouse: Turn Your Smart Phone Into A Wireless Multi-touch Magic Mouse

SmartMouse is an application (available on iOS, Android and Windows desktop) which can easily turn your smart phone into a super wireless multi-touch magic mouse.

It’s quite easy to use. First install SmartMouse client on both PC and smart phone, and then connect two devices by WiFi or Bluetooth. Then like using Macbook’s multi-touch trackpad, you can just lay your fingers on your smart phone screen to tap, double-tap or tap with two fingers (to simulate the Right Click) to remote control your PC. It’s very handy!

And what SmartMouse can do is more than that. It also developed some finger gestures to cater to different situations. When doing presentations, you can slide on the phone to turn to the next page on screen. When browsing websites, you can roll the web pages with two fingers sliding up and down. It’s also convenient to do simple action such as switching off and stand-by your PC. With SmartMouse, transferring files between your smart phone and PC become deadly easy, just more your finger and tap to choose the files and send. You may check the video demo below.

SmartMouse looks tiny but is a really cool application. It’s good for those lazy guys who like to connect his PC with bigger screen like TV to watch movies, so they can just sit in their sofa and remote control it with smart phones; it is also useful when we’re giving presentations. It also reminds us of previously covered app called WoAiDianShi (literally meaning I love TV) which’s fantastic as it changes a mobile phone into a TV remote. Smart phones are dominating the market now, but obviously besides making call and taking photos etc, there are still lots to discover what we can do with them.

SmartMouse is developed by Beijing Ti Qu Network & Technology co., LTD, a self-funded team of ten people based in Beijing.

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Weiyuyin: An Interesting Vocal Plugin for Weixin

With Tencent Weixin/WeChat penetrating into Chinese people’s daily life, it’s becoming an platform that more plugins are expected to be developed to enrich its functions. Weiyuyin is an interesting vocal plugin for Weixin. When using Weixin, you might feel embarrassed when you have nothing to say? Are you reluctant to send a piece of voice message to a stranger? Weiyuyin provides you with interesting solutions.

Weiyuyin includes different styles of voice messages, such as animal’s sounds, popular slogans, amusing dialogues and so on. You may insert these voices to express your emotion or to change the atmosphere. What’s more, you can DIY your own voice messages! After recorded in Weiyuyin, your voice can even be changed into robot’s voice or cute baby voice if you like.

Weiyuyin could help users make friends with strangers to an extent. It’s obvious that vivid sound effects make interaction between friends more absorbing. But to strangers, its vocal messages can break the ice and melt down the tension. And, with Tencent Weixin’s Open Platform launched in May 2012, an increasing number of plugins or services can be integrated in Weixin such as very popular application Changba (sharing your karaoke songs with friends on Weixin). With these third-party service  installed into Weixin, users can play games, record songs, and do anything you could on the mobile phone. Eventually, Weixin may become a very influential platform that every application might rely on it, just like Facebook’s open platform. Note that Weiyuyin is already among Top 25 in Chinese App Stores!

Weiyuyin is developed by Shortail Lab, a Shenzhen-based company. It has launched several social-networking apps before, including YueYue (an LSB app inviting people near you to do something together), HuaHuaCai (similar to Draw Something) and HeHe (a service allows you to post weibo with more than 140 words).

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Pony Ma Shares Thoughts On Mobile Internet, Says Weixin Users Hit 200 Million By This Month

In the 2012 China Internet Conference, the penguin kingdom leader Pony Ma shared his opinions on the mobile internet. Here’s some key notes.

The Trend

Pony Started the speech by quoting some latest data that by the end of June, Chinese mobile internet users have reached 388 million, and the number has passed 400 millions till September. “It is very clear that the mobile internet is the future trend, and we are all facing a brand-new area in which there are new rules and new user habits ahead of us.”

To illustrate this point, he showed some facts of the Tencent community, “According to our analysis, more than half of the messages on QQ are sent through mobile devices. On our SNS platform QZone, everyday about 200 million pictures are uploaded there. And now over 53% of the pictures are taken by phones. This is very prominent growth.”

“Our mobile IM Weixin was first launched 14 months ago, and now in this March we have already had over 100 million registered users. And I believe that by the end of this month, the number could have been 200 million. ”

The Critical Period

There is one particular difference between the products on mobile and on fixed internet access as to Pony. “On PC internet, the traffic entrance is mostly realized through several search engines or client tools offered by a small fraction of tech companies. However, on mobile internet the stage could be everyone’s thanks to the open Appstore market. Even a less-than-2-person team can create the hottest product overnight.”

The new mode surely brings along a higher standard for product quality. “A user can install an app within seconds, but he can also uninstall it right away if he gets confused or dislikes it. On the other hand, if he finds an app useful or interesting within a minute, he will very soon share this with friends through SNS or mobile tools. And this could be even quicker than you could imagine before this app hits the No.1 place on the Appstore ranking list.” Pony explained.

“I found it that the critical period of an app was less than a month. Usually a successful app would become very popular in 3 to 7 days after its release. If your product hasn’t seen any good mark after a month, you have to think about innovating and change.”

The Security Issue

“A recent report on 7 popular Appstores showed that about 58% of the apps are suspected of revealing users’ privacy. This could not necessarily be illegal, but users are innocent for they can not really make sure if their information is safe or not.” Pony also pointed out that Tencent was very serious about the security issues on mobile, and that the company urges the whole industry to take notice of it.

At the end of his speech, Pony announced that “Tencnet will put in totally RMB 10billion as a security fund to encourage more enterprises working on the safety of mobile internet. I hope that in this filed, all the players can work together and never stop looking for a better solution to provide a safer user environment.”

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Benlai.com: B2C eCommerce Site Selling Safe and Healthy Food

Benlai (literally meaning Original) is a B2C eCommerce site providing safe and healthy food. Currently, its service is only restricted in Beijing.

Benlai offers a wide range of food, including vegetables, fruits, poultry, egg, milk, fish, seafood and so on. The company has established relationship with Chinese and oversea high quality food suppliers. Users make the payment online and the food will be kept in cold-storage and delivered directly to their home.

To ensure food safety, the company need pick some samples from each batch of food and test 43 routine items. Buyers are encouraged to compile experiences of purchasing into stories and post them on the website with nice pictures. Of course, these types of food are more expensive than those you get in the local market, so it aims at middle- and high-income people.

It’s not new for a startup tapping into the food industry, but it’s rather difficult to stand out we have to say so. The entire process, such as quality control, restoration of fresh food and transportation are all hot potatoes to tackle.

Benlai is founded by a former executive in Netease (NASDAQ: NTES). We’ve been told that it has RMB 50 million registered capital, planning to stretch their service from Beijing to Shanghai and Guangzhou with its RMB 200 million funding.

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