domingo, 2 de enero de 2011

For Apps, Profit Focus Is Blurry - WSJ.com

For Apps, Profit Focus Is Blurry - WSJ.com



Companies in recent months have launched a slew of photography applications for the iPhone and other smartphones, but many of these start-ups are still trying to figure out the best way to profit from their software programs.
The apps, many of which are free to download, let users apply special effects to photos they snap with their phones. The apps also make it easy to share photos on social media sites like Facebook and Twitter.
The apps have garnered millions of downloads in the past year, but building a business model has proved trickier. Some of the app makers are charging users for extra features; others plan to sell advertising or even prints of the snapshots. At least one start-up is exploring the idea of alerting a cellphone user to nearby advertisers once the person has snapped a photo.
Bloomberg News
New apps for smartphones let users apply special effects to pictures or share photos on social media sites.
"It's hard to monetize the apps right now because there are so many especially in the photography space," said Thomas McLeod, president of app maker Imaginary Feet LLC. "It's hard not to get lost in the oversaturation of the other apps."
Apps have to generate enough interest and not get lost in the pile. According to AppleInc., there are now more than 300,000 apps in its store alone, compared with 140,000 last January.
Currently, 28% of people in the U.S. have smartphones, according to ABI Research. Sales this holiday season indicate that an even larger percentage of Americans will have them in 2011, says Neil Strother, an analyst with ABI Research.
More and more smartphone consumers are using the devices as their primary camera. And as Dow Jones Newswires's Roger Cheng reports, app developers are getting in on the trend. He gives you his take on some of the mobile photo editing tools and sharing programs that have been cropping up.
Since smartphones have built-in cameras but little in the way of photo-editing tools, a crop of companies have stepped into the void. The latest notable entrant: Foursquare introduced a photo-sharing capability in December to its location-based service. Now, as Foursquare's five million users "check in" at a location, they'll have the ability to share a picture of where they are, and their friends can comment on it.
Foursquare isn't planning to make money off the photo feature directly, but hopes it's an added lure for people to use the main app, says Alex Rainert, head of product of Foursquare.
Another offering, the free Instagr.am app, has been downloaded more than one million times since it was released in October. Users can snap photos, tweak them with filters and then share them with followers, much like users share text and links on Twitter.
Kevin Systrom, chief executive of Burbn Inc., the start-up behind Instagr.am, says he is considering adding local advertising. Under one scenario, users might take a picture and would then see a "nearby" tab listing local businesses such as bars and restaurants. Those businesses would pay for placement.
However, Mr. Systrom says such ideas will have to wait until the company has enough users to attract advertisers. "Our goal is to grow as big as possible. Any ad firms want to buy in the millions of users," he says.
PicPlz is a similar free app created by Mixed Media Labs Inc. It first became available in June, and has been downloaded 200,000 times and has 100,000 registered users on its website, says Dalton Caldwell, founder of Mixed Media Labs. But the company hasn't made money from the app yet.
Mr. Caldwell recently received $5 million of venture capital from Andreessen Horowitz as the seven-person company develops its business model. He says he will use the funds in part to hire an ad sales team.
Imaginary Feet makes SpyPic, a $1.99 iPhone app that allows users to surreptitiously take photos by suppressing flash and other tactics. It has been downloaded more than 120,000 times since its August launch, but only 10,000 of those downloads were paid, Mr. McLeod says. The others were downloaded free as part of regular promotions.
A large number of photo apps have cropped up that allow you to tweak pictures, add filters, tag on information about subject and location, and post them on social-networking sites. But what's the business model behind the increasingly popular free apps? Roger Cheng reports.
Mr. McLeod says the app is profitable, but that monetizing apps of any sort is difficult. The company doesn't do any advertising inside the app.
One firm that has gotten traction with its business model is Synthetic Corp., a San Francisco-based maker of photo apps including Hipstamatic.
Since Hipstamatic's launch in December 2009, the $1.99 app has been downloaded more than 1.7 million times. The app allows users to choose different lenses, films and flashes. The firm charges 99 cents for a package of add-ons such as infrared.
The company generates a third of its revenue from those extras, says CEO Lucas Buick, and is profitable. In September, it launched a service where users can send in photos and pay a fee for printed copies.
Some bigger players are getting into the photo app game, but often to drive sales of products rather than generate app revenue. Eastman Kodak Co.'s Pic Flick app allows users to print mobile photos to their Kodak wireless printers.
Since November 2009, the free app has been downloaded more than 40,000 times. "It drives revenue and more use of printing," so people need to buy more Kodak ink, says Tom Hoehn, director of interactive marketing for Kodak.

Billion-dollar Ideas: Finding Tomorrow’s Growth Engines Today

Billion-dollar Ideas: Finding Tomorrow’s Growth Engines Today


Billion-dollar Ideas: Finding Tomorrow’s Growth Engines Today

To create growth in uncertain times, use this disciplined and market-focused methodology. It can help you discover and distill attractive new ideas and build a business case for implementing the best of them.

After several years of survival mode for many companies, growth is back on the agenda. But the requirements for success have changed. In today’s conditions — uncertain recovery, limited capital, and many new competitors — companies must find new ways to grow.

There’s no going back to the growth ideas that were bouncing around the organization before the global financial crisis. Executives need a robust framework to help them rapidly develop a long list of opportunities and then choose the very best ideas from it. The process must be comprehensive, efficient, rigorous, collaborative, and focused on “market-back” opportunities designed to meet customers’ needs. And it must be bold — the company must resist the temptation to do what has been done in the past.

Booz & Company has created a methodology for this, based on five lenses used for evaluating growth strategies. The five lenses — share of wallet, new regulations, technology and applications, distinctive capabilities, and business models — represent discrete and complementary ways to find and judge unconventional and unseen ideas. This approach has already been used successfully by companies in many industries and geographies.

A Process for Thinking Big and Bold

Too often, companies fail to imagine and fully explore all the potential options available to them, because they have been so intently focused on existing businesses and customers. They rely on conventional growth strategies such as mergers and acquisitions, geographic expansion, competitive pricing, and product or service line extensions. Although all these growth paths are well trodden, they also have limitations. For example, none of them are attractive when capital markets are tight and consumer demand is weak. But there are many new avenues for transformational growth that could be far more lucrative than the current strategies and that could be achieved with reasonable effort.

In seeking these avenues for growth, it pays to think big and bold. Consider how many of the largest, most iconic companies in the world — old and new — achieved their greatest growth when they entered and conquered totally new markets. For example, the Nokia Corporation, the world’s largest maker of mobile phones, started out in the 1880s as a manufacturer of cables, paper, and rubber tires. It was only when Nokia began separating from its roots as an industrial conglomerate to focus on electronics, and eventually telecom, that growth took off.

The Toyota Motor Corporation started out in the textile business making threads and looms. In the 1930s, Kiichiro Toyoda, the founder’s son, then head of Toyoda Loom Works, decided to branch into automobiles, which was considered a risky business at the time. American Express Company was an express mail company before it moved into financial services. Before Nintendo Company grew into a global powerhouse in digital games, it made playing cards and ran a chain of hotels for Japanese and other Asian markets.

These examples are not meant to suggest that wild leaps into new businesses and markets are right all the time and for all companies. For every Nokia, American Express, Toyota, or Nintendo, there are scores of companies that failed to achieve their new growth aspirations. Failure can often be traced back to the ad hoc processes with which many companies determine their growth strategy. When the search for new growth ideas is too unfocused, the best opportunities do not surface, and valuable time and resources are wasted. An unfocused process can also fail to take into account a company’s existing capabilities and assets. The result is a lack of coherence: ideas that require investment in capabilities that fit well with only one part of the company’s portfolio. This can hobble a company, especially if its competitors are more coherent. An ad hoc process can lead companies to implement new ideas based on flawed or overly aggressive assumptions. It can enable executives to revive old ideas that, for good reason, never had support in the first place.