We hosted our 15th Mobile Breakfast Series event yesterday. The topic was – Is HTML5 Really Disruptive?

HTML5 has been talked about for a long time as the most disruptive force for mobile applications since the Apple Appstore was launched 5 years ago. But, can it really change the industry dynamics? How do you solve the reach problem for the developers? Many interesting initiatives in 2013 like Firefox OS but will they make a difference? How do developers view HTML5?

The platform wars are not new, they have been around since computing evolved. The discussion and debate just morphs into the flavor of the day. In the recent past, smartphones and tablets have redefined computing as we know it. The vitality and strength of any ecosystem is determined by the number of app developers developing for a platform and actively monetizing. Right now there are only two sheriffs in town – for units it is Android and for revenue it is iOS. Others play on the fringes. HTML5 has been in the discussion for a while and whether it can stand on its own as a platform has been a matter of great debate amongst the participants of the trade. As usual, we had an outstanding line of speakers which over a 100 years in combined experience in the mobile space, which is just phenomenal. These guys have worked with all the major computing and device companies so the depth of understanding of real issues, challenges, and opportunity really showed. The panelists were:

Hank Skorny – VP/GM – Software Services, Intel. Hank is a veteran of the platform industry with successful stints at Apple, AOL Mobile, Microsoft, Adobe, Infospace Mobile, and now with Intel. He recently acquired Mashery and Aepona to beef up the Open API initiative for enterprises, operators, and developers.

Jeff Warren – VP – Mobile and Online Partner Marketing, Expedia. Jeff previously worked at Motorola and his team has been doing some great work in mobile at Expedia, a real example of how companies are adapting to the 4th wave that I have been talking about.

Asokan Ashok – Director – Content and Services, Samsung. Ashok has worked for Motorola, Nokia, Ericsson, HP, and now with Samsung. You can say, he knows a thing or two about devices.

Sundeep Peechu – Partner, Felicis Ventures. Remember Rovio or rather Angry Birds. Well, he was one of the early believers and investors when it was not fashionable to invest in apps. Now it is a multi-billion dollar industry. Felicis itself is fairly impressive. Just in 6-7 years, they have made 100+ investment with 46 exits.

I kicked off the discussion with an animation of how the market shares have changed in the smartphone space since 2004 from Symbian, Windows and Blackberry to iOS and Android. We do seem to go in cycles. Are we on the tip of another cycle?

Source: © Chetan Sharma Consulting, 2013

Not a complete change but Hank made the case for HTML5 and articulate a well reasoned thesis that HTML5 is not going to be disruptive because it is the web but rather due the economic reasons. Companies are just running out of people they can hire to build apps and HTML5 provides a solution with more trained staff and cheaper cost of development.

Source: © Hank Skorny, Intel, 2013

Source: © Hank Skorny, Intel, 2013

Below is the summary of the discussion:

HTML5 needs a champion

• One of the big themes that emerged from the discussion was that like for any platform and its success over time, HTML5 needs a strong advocate and a champion who can move the industry forward.
• While Mozilla has been making tremendous strides with FireFox OS, HTML5 ecosystem will benefit from a senior statesman taking the stage and the most natural candidate is Google as they have the most to win.
• Apple can easily pivot if the need be but is unlikely to push HTML5.
• Microsoft has a unique opportunity to become HTML5’s biggest cheerleader. In fact, without a strong HTML5 strategy, Windows might not reach its full potential and continue to struggle.
• EA is moving 80% of their games to HTML5 by 2015.
• OEMs should become champions of HTML5 and Open APIs to make their devices stand out and become and important control point in the value chain.
• Panelists didn’t think operators have much role to play irrespective of what happens with HTML5 as they are just slow on working together and have missed out on several opportunities like location, billing, identity and while they can play an important role, they just don’t move fast enough to make an impact (there are exceptions of course).
• Expedia sees 50% of spend on mobile web (vs native) so HTML5 stands a great chance to further its role in the app economy.

Is it the economics, stupid?

• Developers are still going iOS first and Android second as monetization is 3x that of all the other platforms combined.
• Developers don’t like the 30% tax but can live with it
• Some bigger players are circumventing the tax trap and building applications that allow for transactions outside the app store e.g. Amazon, Uber.
• 50% of developer costs are in porting if they chose multiple platforms so for many developers the margin pressure is intense and might not be sustainable.
• While the 30% tax is cumbersome, Apple is primarily interested in selling devices and can easily lower or change the economics if that what helps them keep their competitive advantage. They have given out $10B to developers which means the appstore has generated over $14.3B in revenues thus far. The revenue it makes is barely keeping its servers humming.
• The 30% tax is a false debate as in the larger scheme of things it doesn’t matter and can easily go away if that is what seems critical to the strategy.
• The approach to HTML5 is not straightforward either – there are issues with performance and hence usability, fragmentation, discovery, monetization, and timely access to device APIs.
• 92% of gaming is casual gaming and those game developers are already developing HTML5 based games e.g. Doubledown which is doing $100M in revenues

• Facebook and Linkedin withdrew from HTML5 very publicly in favor of native and that put a lot of pressure on the HTML5 efforts of many corporations who started questioning if they are on the right track. However, the choice of the platform really depends on the overall strategy and the context of your content and offering. The decision can’t be taken in isolation. As Sencha was later able to demonstrate, one can build a better HTML5 app if one just focuses on it (read: get the right developers involved in the project).

Enterprise to lead the way

• The kick to the HTML5 wagon might come from the enterprise who are worried about security and want to leverage their existing development resources (Enterprise software pricing also tends to be higher).
• There is much more money in the enterprise segment than the consumer space and enterprise customers are going to make a concerted effort with HTML5
• The available of open cloud APIs from the likes of Amazon and Intel will accelerate the move towards HTML5.

HTML5 needs to solve

• Payments – a single API that can avoid filling out forms and work as seamlessly as the iTunes checkin which btw has 575 million accounts. Facebook are you listening? Operators can again play a role but getting a uniform API across operators is a herculean task.
• Fragmentation – While fragmentation will never go away, browser vendors need to align themselves to reduce fragmentation for faster adoption
• Device performance – Qualcomm is optimizing chipsets for HTML5. In the future, we could see multicore processors with one or more cores dedicated to HTML5 performance and optimization.
• Faster standards adoption – Standards by nature move at snail’s pace and can’t keep up with the native innovation. The API access is critical for developers and unless HTML5 makes headways in a significant ways, it is an issue for many developers.
• Discovery – while we might resort to web search, the app search environment actually works really well (though it needs to improve a great deal as well). It provides curation by the community which is helpful for discovery besides vanilla search.
• Notifications, DRM, Secure storage, and background processing all need to be at par with the native experience.

The world is not either/or

• In reality, developers decide on their toolset based on the task at hand. Most of the times, the app is a hybrid of native and web. Web is encapsulated by native.
• However, to reduce the development costs, more usage of HTML5 is desired once we get past some of the problems we discussed above.

What do consumers think?

• Consumers are pretty happy w/ iOS and Android and not really clamoring for new platform but competitive forces brings out the best in all. Android keeps iOS on its toes and a third strong platform will ensure the top two don’t get complacent. So, while consumers are not really screaming HTML5, the ecosystem forces of checks and balances necessitate the need for something like HTML5.

All in all, a great discussion. Had insightful questions and comments from the audience as well who are well-plugged into the debate.

Thanks for all those who came and participated. My thanks to the speakers for making the time to share their insights.

Next, our Mobile Future Forward Summit is coming up on Sept 10. The early bird expires this friday so make sure you grab your tickets.

We also released our Mobile Future Forward Research Series Paper –

It goes into details about why some players are successful in the device space and others aren’t. You can download it here.

Thanks and have a great rest of the month.