The Valley looks towards 2009 - Part Two

Man in field with laptop
Mobility is changing the way we interact with technology

Will YouTube's dominance of video sharing come to an end? Will we all own a smartphone and has Apple changed the game yet again? Maggie Shiels continues her look at some of the predictions for 2009.

Read Part One here

MOBILITY

shots from Intel developers conference
Mobility presents real opportunity for advertisers and marketers

With more than three billion cell phones in the world and one billion PCs, mobility is the buzz word for 2009.

Smartphones are set to gain a bigger market share in the next year and industry watchers predict that by 2012, they will make up 75% of all phones sold in the US. By 2015, they will represent 65% of all phones sold globally.

The Pew Internet and American Life Project has said that the mobile phone will become the primary means of internet access across the globe by 2020. The growth will largely be driven in emerging economies like India, China and Brazil.

Yahoo agrees, and views the mobile market as a major revenue opportunity that will really take off with advertisers and marketers this year.

"We are seeing a lot more interest in mobile and we believe 2009 is going to be a bit of a tipping point," said Michael Bayle, Yahoo's senior director of global mobile.

"30% of consumers will browse certain mobile sites at the expense of visiting those same sites on the PC. One example comes from ESPN in February when more people came to the NFL (National Football League) site on mobile rather than on the PC."

Mr Bayle said for advertisers and marketers to really make an impact in the mobile world, they have to think smart.

"If you ask a consumer 'Would you like advertising on your phone?' the answer probably should be no. But if you ask them if they would like some kind of relevant content and some kind of entertainment perhaps say when their flight is delayed or they are killing time, then the answer is generally yes.

"We believe that is a great value proposition and why advertising can carry great value to consumers," said Mr Bayle.

THE GAME CHANGER

It would be fair to say that for Apple, the App Store has surprassed the company's wildest expectations.
Steve Jobs in front of ipod touch
Piper Jaffray estimates the App Store could exceed $1bn in annual revenue

When Steve Jobs appeared on stage in September to update the download numbers, there was a sense that even he could not believe its success.

To date it has handled more than 300 million downloads with two million a day from a store that offers 10,000 applications for sale.

The store has spawned a whole new industry with the venture capital firm Kleiner, Perkins, Caufield & Byers getting in on the act with its own fund to seed companies making apps for the market.

One such company that has had phenomenal success with its applications is Tapulous, based in Palo Alto. It started with a free game called Tap Tap Revenge in which players tap and shake their devices to the beat of a tune.

The game has garnered over three million downloads and attracted some big name music artists who asked to have their music used in the game. They include Weezer, Nine Inch Nails, Moby and Daft Punk.

Tapulous chief executive Bart Decrem said the iPhone has taken the industry to a whole new level.

"The business models are still shaking out because it is still the beginning of this phenomenon, even though apps have actually been around for about a decade. It is the iPhone and the App Store that has led to critical adoption by users."

Mr Decrem said he predicts that with so many apps now available, it is hard to sort the wheat from the chaff which means something has to change.

"I think what you are going to see in 2009 is price options settle out and the barriers to entry go up and up. For the first six months of the App Store, anyone could build a cool little app and you might get buzz around that.

"I think in 2009 we are going to see that mature and that means users are going to have higher expectations and the cost of entry is going to go up somewhat because you are going to have to offer richer, more sophisticated experiences," predicted Mr Decrem.

ONLINE VIDEO

2008 has been a year of shifting sands for the world of online video.

YouTube may well have popularised video on the web, but Hulu, which just launched in March, is providing strong competition.

The joint venture between NBC and News Corp, has managed to prove there is a market for professional video online. Hulu was chosen by the Associated Press as its pick for website of the year.
YouTube sign
Every minute over 13 hours of content is uploaded on YouTube

YouTube still dominates the market with 83 million unique visitors in October compared to Hulu's 23 million. But Hulu is planning to go international next year.

But both sites prove that a new generation is growing up with online video.

"Every generation exhibits some distinctive behaviour," said Jim Patterson, product manager at YouTube.

"Marketers like to caricature them and give them names: baby boomers, generation X and generation Y. I think we are seeing the emergence of a video generation.

"This generation of users utilize the web differently and consume video differently. They grew up in an environment where digital, interactive media was ubiquitous. It has shaped how they use the web."

And Mr Patterson said this new video generation has also shaped the very nature of how YouTube is being used.

"Comscore is estimating that YouTube is the second largest search engine," he said.

"To this cohort, YouTube is their search engine. YouTube 'is' the web. Seeking the answer to any question, they prefer that the result be expressed as a video, so they go to YouTube."