should automakers build app stores?

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APPS 4 CARS GENIVI All Members Meeting April 25, 2012 Ludovic Privat 1

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Page 1: Should Automakers Build App Stores?

APPS 4 CARSGENIVI All Members Meeting

April 25, 2012Ludovic Privat

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Page 2: Should Automakers Build App Stores?

Automotive

Wireless ConsumerElectronics

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Page 3: Should Automakers Build App Stores?

Automotive

Wireless

AutomotiveApps

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Page 4: Should Automakers Build App Stores?

• App Store economics

•What App Strategy for Car Makers?

• Should you build an app store?

• If not what to do?

Topics of the day

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Page 5: Should Automakers Build App Stores?

App Store Economics

•Choice

•Volume

•Price (low)

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Page 6: Should Automakers Build App Stores?

Choice

550,000+ Applications on Apple App Store

NB of Apps

NB of

downloads

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Page 7: Should Automakers Build App Stores?

Volume

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Page 8: Should Automakers Build App Stores?

Low price

• Current average app price: $2.02

• Current average game price: $1.02

• Current average overall price: $1.88

Apple App store - April 2012 Source: 148apps.biz

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Page 9: Should Automakers Build App Stores?

Low price

Free $0.99 $1.99 $2.99 $3.99 $4.99 $5.99 & up

46.43% 25.77 %10.73 % 5.15 % 2.59 %2.93 % 6.4 %

Percentage of app in each price categoryApple App Store (April 2011)

Source: 148apps.biz 9

Page 10: Should Automakers Build App Stores?

Low price

•U.S. consumers who have never paid more than $1 for an app:

• iPhone owners: 45%

• Android owners: 62%

• Blackberry owners: 63%

TeleNav survey - 1,000 respondents (Aug 2011)10

Page 11: Should Automakers Build App Stores?

Auto appsHow much would they pay (US)?

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Page 12: Should Automakers Build App Stores?

Auto appsHow much would they pay (UK)?

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Page 13: Should Automakers Build App Stores?

Auto appsHow much would they pay (Ger)?

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Page 14: Should Automakers Build App Stores?

• Apple app store• 550,00 Apps available, 25 Billion Apps downloaded until March 2012

• $4 Billion paid to developers (to date); $2.1Billion paid in 2011

• Average revenue: $0.16 / app

• Google app store• 400,000 Apps available, 10 Billion Apps downloaded (Dec. 2011)

• Google Play (Android Market) is said to be 23% of iOS revenue per active user.

• In-app advertising• Estimated at around $200-$300 million in 2011

App Stores Revenue

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Page 15: Should Automakers Build App Stores?

App Stores Revenue

2011$4B

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Page 16: Should Automakers Build App Stores?

App Store failures

OperatorHandset Maker

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Page 17: Should Automakers Build App Stores?

• One closed garden replaces another

• From wireless operator’s lock-up to Apple/Google Lock-up

• New forces:

• Competing stores on Android (Amazon, GetJar & others)

• HTML 5 apps, mobile payment

Long term model?

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Page 18: Should Automakers Build App Stores?

In-car Apps

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Page 19: Should Automakers Build App Stores?

In-car App flavours

Built-in Beamed-in Brought-in

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Page 20: Should Automakers Build App Stores?

Are Car Manufacturer’s App stores sustainable?

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Page 21: Should Automakers Build App Stores?

Mobile industry

Developers are the real currency

Large addressable market

developer interestConsumer interest

Choice

480 Million smartphones sold in 20112 dominant platforms: iOS & Android

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Page 22: Should Automakers Build App Stores?

Car industry

Small addressable market

Little developer interestNo consumer interest

Little Choice

60 Million passenger cars sold in 2011large fragmentation per brand

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Wireless innovation speed

• Smartphone & tablets are becoming powerhouses: CPU, GPU, Sensors

• Product & innovation cycles are extremely fast, driven by intense market competition

• In contrast car life cycle remains pretty stable

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Page 24: Should Automakers Build App Stores?

Consumer interest for in-dash app stores?• Likely to be seen as duplication of their

smartphone apps

• High cost of ownership (connectivity cost)

• limited success of connected PND (25-30% of subscription renewal) demonstrates driver’s unwillingness to pay for another subscription

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Page 25: Should Automakers Build App Stores?

Built-in app store?

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Page 26: Should Automakers Build App Stores?

App opportunities for car makers

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Which apps?

• Lifestyle apps: Internet radio, Twitter, Facebook, etc.?

• Driver apps: navigation, traffic, weather, etc.?

• Vehicle apps: eco-driving, remote door opening, tracking, monitoring, etc.?

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Page 28: Should Automakers Build App Stores?

Key opportunities• Focus on core competency: vehicle centric value-added

services

• Piggyback on driver data plan when possible

• Big data opportunity about car knowledge (parts, etc...)

• Big data opportunity on driver knowledge (driver behaviour analytics)

• Extended customer relationship over the full lifecycle of the car

• B2B monetization opportunities with third parties: insurance companies, car part suppliers, etc...

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Page 29: Should Automakers Build App Stores?

• App market is tough business

• Don’t fight a lost battle against wireless industry giants

• Monetize opportunities based on vehicle-centric core competencies

Key takeaways

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Thank you!

[email protected]+33 6 22 05 61 38

Twitter: @gpsbusinessnewshttp://www.gpsbusinessnews.com

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