Comments on: Investing in iPhone Startups (Part 2): The VC Way

By: The Hyper Team @ Venture Hype

The Hyper Team @ Venture Hype — Fri, 15 Jan 2010 22:43:35 +0000

Thanks for your comment.

You might have misunderstood the purpose of these posts and the platforms VCs are investing in.

1, 2 - We wrote the golden price point is $0.99 and it’s linked to a further discussion. When you haven’t even met the startup you’re going to back, there’s no way you’d know its business model and price point. $0.99 is a conservative number. And even at several bucks an app you still need a big market to generate a good return.

3. Investors are backing startups that extend the iPhone and iPod Touch platform. Both data must be looked at.

4, 5 - Was mentioned in part 1 and linked to further analysis.

6 - Good point. But do understand that our focus is on the kind of iPhone startups VCs are backing.

7 – Again, our focus is on iPhone and iTouch platform and what VCs are backing. And we’ve mentioned multiple times that the investing decision rest on the reader. We’re not advocating people to invest in iPhone startups, but to help the initiated to filter out those that obviously don’t fit the bill.

8. That’s one of the points we study the kind of iPhone startups VCs are investing in. Read multi-platform.

9. We can add these bits to make it a little clearer: “Of course you want to look at other factors, such as the startup team, the company's competitive edge, piracy issues, and go-to-market issues.”

10. See part 1 - users are using the apps 30 times more compared to other devices. Then part 2 – multi-platform.

We appreciate your contributions and making this a better post.

By: The Hyper Team @ Venture Hype

The Hyper Team @ Venture Hype — Fri, 15 Jan 2010 22:36:22 +0000

Thanks for your comment.

You might have misunderstood the purpose of these posts and the platforms VCs are investing in.

1, 2 - We wrote the golden price point is $0.99 and it’s linked to a further discussion. When you haven’t even met the startup you’re going to back, there’s no way you’d know its business model and price point. $0.99 is a conservative number. And even at several bucks an app you still need a big market to generate a good return.

3. Investors are backing startups that extend the iPhone and iPod Touch platform. Both data must be looked at.

4, 5 - Mentioned in part 1 and linked to further analysis.

6 - Good point. But do understand that our focus is on the kind of iPhone startups VCs are backing.

7 – Again, our focus is on iPhone and iTouch platform and what VCs are backing. And we’ve mentioned multiple times that the investing decision rest on the reader. We’re not advocating people to invest in iPhone startups, but to help the initiated to filter out those that obviously don’t fit the bill.

8. That’s one of the points we study the kind of iPhone startups VCs are investing in. Read multi-platform.

9. We can add these bits to make it a little clearer: “Of course you want to look at other factors, such as the startup team, the company's competitive edge, piracy issues, and go-to-market issues.”

10. See part 1 - users are using the apps 30 times more compared to other devices. Then part 2 – multi-platform.

We appreciate your contributions and making this a better post.

By: McGarryConsult

McGarryConsult — Wed, 13 Jan 2010 18:39:20 +0000

You may have overlooked 10 key mobile industry issues:
(1) Firstly top selling is not the same as grossing, look at the top grossing iPhone apps and how many are at $0.99? Look at sales of Sat Nav TomTom, people will pay for quality product. Pinch Media http://bit.ly/3yX5f5 shows that key price is $4.99 and other research shows the mean price of Top 100 grossing apps is over $5
(2) Games remain dominant - at under 15% of new app releases but normally make up 2/3 of Top 10 selling, Top 10 grossing, Top Free and the What's Hot List. EA Mobile had record profits last year. As an example - In the UK (2nd biggest App market) on 3rd January, Doodle Jump was top selling app at £0.59 ($0.99), but only #18 grossing app and #14 grossing game
(3) People often include iPod Touch data within iPhone smartphone data, whilst the iPod Touch is a mobile device it is not a smartphone and can confuse data.
(4) The new major mobile markets will be Asia & Africa, in Asia the mobiles have huge growth (India 16m new phones per month) and markets (China 700m phones), with world leading capacity and infrastructure (Japan and South Korea). Asia is also huge into gaming and virtual goods, key revenue generating areas
(5) Outside the US/Europe - many countries use mobiles as their primary infrastructure and communication media. Thus mobiles are use for banking, micro-payments and other forms that often would not make commercial or practical sense elsewhere. In the future, many big Asian and African mobile industry players will be able to scale to hit the West but how many Western ones could do the reverse
(6) Piracy as not been mentioned, ngmoco reported 90% piracy rates on some of its games. Also jailbroken iPhones were subject of a mobile virus before Christmas with a malicious Android phising app in the news recently. These will become increasingly common
(7) Handheld devices, app-stores talk of money and billion downloads but the real money making mobile device is the Nintendo DS, 100m+ units sold, maybe $8b games sales in 2009. This is where investment should be
(8) Infrastructure, O2 in the UK and AT&T in US highlight that as mobile operators and infrastructure are increasingly under pressure from data transfer and downloads. How will this infrastructure be able to sustain exponential growth in apps, downloads and mobile data over the next 3 years? Will this not restrict growth?
(9) App-stores, still coming on board but are still causing many problems as people are often restricted to one particular app-store - these still remain a major go-to-market issue which people overlook. In addition, discoverability on and off app-stores is now becoming major issue for developers
(10) What about Web Apps or Flash based apps, these require WiFi but they are much quicker and cheaper to establish plus avoid app-stores and are easily and instanteously viewed across a range of mobile, handheld, netbook, PC, tablet, etc devices. Google's Nexus One has only 190Mb for apps and Palm Pre are more focused on web apps, so maybe that is the future...
The market is definately growing though

@WeeManStudisos
@McGarryConsult