Hotspots for digital media and mobile software

How does one define “hotspot”?  Is it having lots of activities?  Is it having more infrastructure and a bigger capital funnel?  Or, is it developing products with the most sales?

The mobile software space is huge.  A mobile application could be strategic or revenue generating.  It could be a remote access terminal through the server-client model, a new product offering at a new price point, or a new platform enabling new corporate capabilities.  With more metrics than one could show in dashboards or scorecards, it is important to remember that “what gets measured is what gets done.”

2009 in review

One of the most disruptive trend in 2009 is simplifying the process of accessing and purchasing software on a handheld.  There will be 26 mobile software stores in the market.  Since the Apple App Store has the largest selection with over 120,000 apps and the largest transaction volume with over 3 billion downloads in 77 countries, let’s shift the conversation to Apple and highlight some of the activities there in the past year.

If you consider hotspots in terms of sales and search through the top 10 selling apps in 2009, you will find that Hamburg, Amsterdam, Paris, Melbourne and Seoul are the mobile hotspots outside the United States.  The Top 10 list includes only one app that is developed in Canada. The app is called ColorSplash and it is developed by a fourth-year PhD student at UBC in South Vancouver.

Although enterprises such as TomTom, MLB Advanced Media and Electronic Arts draw much attention in the top grossing category, there are in fact many start-ups and small development houses on the Top 100 list.  If you search through the top 10 selling games in 2009, you will find that Canadian presence has improved from absence last year to one app this year.  That app is developed by Games Café in Calgary.  With that said, there are business models other than the “buy” model such as display advertising, pay-as-you-go and subscriptions.  Although there is incomplete data to accurately compare one mobile software ecosystem relative to another city in Canada, a few start-ups in Waterloo and Toronto are hiring or reaching revenue.

Beware the complacency

Sir Terry Matthews has iterated again and again in his Canadian visits that new technology businesses in Waterloo, Toronto and Ottawa need to look beyond the United States and think globally from the get-go.  Near one of the 2002 World Cup Stadiums in South Korea, Seoul’s Digital Media City is currently building its 133-floor landmark building solely dedicated to R&D of all things digital – a building that is 100m taller than CN Tower.  With several Korean apps on iTunes already reaching Top 10 in 2009, Seoul is positioning itself to edge out other contenders as the next major mobile hotspot outside of the United States.  In many ways, South Korea is already integrated into the global mobile value chain – Samsung is manufacturing and supplying several components for Apple’s latest iPhone 3GS: ARM processing core ($15), SDRAM ($10) and NAND flash memory ($25).

Ontario’s answer

The Ontario government has also taken steps to ensure Ontarians remain in the front pack.  In November, the Ontario government announced plans to invest up to $26.4M (24% of the $107M project) in the Waterloo region to create the Communitech Digital Media and Mobile Hub.  At the national level, the federal government has created the Canadian Digital Media Network also to be based in downtown Kitchener and Stratford.  Then, there is the $250M Ontario Emerging Technologies Fund (OETF) to co-invest with VC firms including Celtic House, JLA Ventures and Tech Capital in various verticals such as digital media, cleantech and life science.

At MaRS, we’re building an ICT practice with experienced advisors, forward-thinking market intelligence, educational programs, self-guiding instructional workbooks, and, of course, money.

There are definitely signs of activity in Canada; however, there is no room for complacency.