• What will the future look like in 2014? Helge Tenno weighs in.
• Jeff Atwood on the post-PC era, Microsoft and Apple.
• Craig Mod talks about how the new Flipboard for iPhone app was built and how it is all about new mobile digital narratives.
• Kickstarter is not just a company or a platform. It is a social movement, and that is why it is so disruptive. Here is an update from the company that is worth reading.
• Technology and digitization of everything is influencing how things are made. The New York Times takes a look at how furniture is made in the digital age.
• How to increase productivity per square inch of your screen. The title says it all.
• An interview with one of my favorite entrepreneurs, ngmoco CEO Neil Young. I just love how clear-headed this guy is.

Also, a bonus link from my personal blog: the new new globalization.

Don’t think that push notifications are the answer. Push notifications are a great way to remind people to use your app, noted Steve Douty, VP of Applications and Mobile at Yahoo. You shouldn’t “leave it up to users to remember to go back to your app,” he said. But at the same time, you don’t want to barrage them with constant popups on their screen that become an annoyance.

As Danilo Campos, head of mobile for flight search app Hipmunk put it, “It all depends on the frequency of push notifications and how those decisions to push those were made. If it’s for the wrong things or things the user doesn’t care about, they’re going to turn it off and you’ve lost an opportunity to build that relationship.” So personalization of apps and frequency and type of notifications is key.

Don’t pack every possible feature inside your app. Apps can die from an overload of features. Just adding more functionality because you can is never the answer, the group agreed. “The more you keep feature creep from happening…that ends up becoming more successful engagement,” said Douty.

“Web applications have a lot of features, [people using them] have time to work, so you can give them additional functionality, but in mobile you’ve got a tiny screen and a tiny slice of users’ time,” said Campos. ”You can best serve them by giving them” a simpler experience.

Don’t assume your app should look and act like your web site. An important part of keeping people returning to an app is that it’s easy and fun to use. If you try to recreate a whole website and all its functionality on a tiny four-inch screen, it might overwhelm or turn off users.

Formspring found that out recently when it was building its app after beginning on the web. “You really need to rethink what you’re presenting and how you’re presenting it,” said Tom Wang, head of product for Formspring. In the end your app might look “radically different” than your site, and that’s totally OK. Don’t be afraid to throw out both your own and users’ expectations in that case.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Siri: Say hello to the coming “invisible interface”
• The future of mobile: a segment analysis by GigaOM Pro
• The state of cross-platform media measurement

Earlier this week, in my email newsletter Om Says, I shared Young’s story about how he changed his company’s business model: a decision that not only saved his company, but also ended up getting it acquired by Japan’s DeNA for $403 million.

In a wide-ranging video interview, he shared some of his thoughts about the gaming industry and mobile app platforms (and business) with me, which I believe are incredibly useful for anyone building apps and app-based businesses. First, though, let me give you context as to why you should listen to him (and why I have a lot of respect for what he has to say).

The first time I came across Neil was about seven years ago.  Then a senior executive at Electronics Arts, he gave a talk about the future of games titled, “Can a game make you cry?” He argued we were entering the phase where games would be nearly movie-like. It was a powerful presentation, impressive enough for me to stay in touch and follow Young’s career.

About three years ago, he decided he was going to leave EA and start ngmoco, a mobile game company. The company raised tons of money from the likes of Kleiner Perkins Caufield and Byers. It rode the iPhone wave, and last year, it sold out to Japan’s DeNA for $403 million.

Young started the company building premium games. He raised millions of dollars from top venture capitalists. Apple promoted his apps inside the app store. Along the way, he learned some vital lessons and formed opinions I think would (and should) come in handy for a lot of entrepreneurs, especially those in the business of developing apps.

“Opportunity is here to build a new kind of entertainment company, thanks to the disruption in media, social and mobile,” says Young. “iOS and Android are the platform for the future of media and entertainment. “ Still, he bemoans the fact that not a lot of apps are not taking full advantage of the technological capabilities of the iPhone and the iPad platforms.

He doesn’t believe you can start an app company based on the iPhone, though does think it’s time to start a tablet-oriented company built on the premise of creating awesome tablet experiences.  He pointed out that on the mobile platform, the “opportunities are for companies that connect customers together and maintain relationships with those customers for a long time.”

Lesson #1: Hits Aren’t a Sure Thing

• You can’t build a company of consequence inside the app store, because it’s a hits-driven business, and the half-life of a game is pretty short.
• The company would have to have two games appear in the top five paid games on the iPhone store every day for 365 days for the company to build a $10-million-a-year business.
• There are thousands of apps in the app marketplace/store. The likelihood that your app is going to break out from the pack without significant support is pretty low.

Lessons #2: Awesome Products Engage Customers & Bring Profits

• Don’t build products for fleeting moments. Instead, focus on building products that build on a relationship with the customer. The longer the relationship, longer you have a chance to monetize that relationship.
• Snoop Dog tells his son that everyone is good at something. Be great. That’s particularly true in the app market. There are a lot of good apps; build something great.

Lesson #3: Great Experiences, not Whiz Bang Technology Are What Matters

• You have to look at games (and apps) through the eyes of the users and look at how you are delighting the customers.
• Great games are those with fun game mechanics, and they always win over games with the greatest/most-cutting-edge technology.

These lessons are only a distillation of what I believe is a knowledge-laced interview with Neil.

Related research from GigaOM Pro (subscription req’d):

• The Real Impact of Facebook’s New Approach to Gaming
• How to Market Your iPhone App: A Developer’s Guide
• Why Microsoft’s Mobile Gaming Strategy Is a Mistake

According to the story, a farmer has a donkey, which falls into a well. The donkey starts braying, forcing the farmer to look for ways to figure out what to do. His conclusion? Since the donkey is old, it’s not worth the effort to retrieve the donkey.

He starts shoveling dirt into the well. The donkey has an “oh-crikey” moment and it starts crying and creating a fuss. But then, it quiets down. With every few shovels of dirt, the donkey re-adjusts, shakes dirt off his back, and stands up. Before the farmer knew it, the donkey was out of the wall.

This old folklore has a simple lesson: When life pours dirt on you, shake it off and move forward. This lesson is particularly true for start-ups that have to face their moment of truth.

Game On

I was reminded of this story when I was transcribing my interview with Neil Young, CEO and co-founder of mobile video games start-up, ngmoco (acquired by Japan’s DeNA for $403 million.) Young and I have talked off and on, and before he sold his company, he and I discussed the change of direction he made for the company.

Neil shared with me the story of how, when facing a near impossible business environment, he had to find a new business model for his company, which started life building premium mobile games.  It sold a lot of games!

To the outside world, ngmoco was a massive success, but Young knew the harsh facts:  the games had a very short half-life and they lost money-making potential once they fell out of the top ten or after the initial couple of weeks.

Young argues that for a company making premium mobile games, the company would have to have two games in the top five paid games on the iPhone store for 365 days for the company to build a $10 million a year business.

Even if you added Android platform opportunities, ngmoco was still in a hit-driven business. With new free (and paid) apps launching every day, Young & Co. knew that it would be difficult to keep on the hit trail. Moreover, the average price of the games was decaying fast and settling at around 99 cents. The ad-based revenue stream wasn’t going to be enough, as the eCPMs were pretty low. Like the donkey, ngmoco was in a well, with no likelihood of coming out.

However, upon closer scrutiny, Young’s team realized they had a lot of games, which had very high engagement and user loyalty. “Games are not built for a fleeting moment in the charts, but are built for an (ongoing) relationship with the customer, “ he says. “The longer you can maintain that relationship, the longer the opportunity.”

Armed with this knowledge, ngmoco started the Plus+ network (its social gaming network), and embraced the Freemium model that eventually led to the company increasing its revenues and later selling out to DeNA.

All Chips In

Young isn’t the first corporate honcho who made tough decisions. Intel Corp., the company we chip-heads affectionately refer to as Chipzilla, was the proverbial donkey in the well in 1983, when it was getting killed in the market by Japanese memory chip makers.

The company had been dabbling in the microprocessor business, supplying chips to the likes of IBM, but the majority of its revenues came from the sales of memory chips, primarily dynamic random access memory (DRAM).

Andy Grove, then-president of Intel (and later its CEO and chairman) made a crucial decision: Forget the memory chips and gamble it all on becoming the single source of microprocessors for the PC industry. His decision came at a time when it wasn’t clear what PC standards were going to prevail, or if the 8086 processor was going to catch on. The rest is history.

And the Story Goes…

Richard Tedlow, a professor at Harvard, in his book, Denial: Why Business Leaders Fail to Look Facts in the Face and What To Do About It once wrote: “Denial is the unconscious calculus that if an unpleasant reality were true, it would be too terrible, so therefore cannot be true… In fact, denial might be the biggest and potentially most ruinous problem that businesses face, from start-ups to mature, powerful corporations.”

Nokia’s denial of the existence of the iPhone and the disruptive impact on its business is a good example. Young of ngmoco could have accepted the short-term success of his company, but instead he decided not to.

I have seen many a startups (and many a founder) spend most of its energies bemoaning its miseries, instead of trying to do something about it. But like the proverbial donkey, the decision is yours to make.

Around the Web

• Niall Ferguson: Americans and Revolutions
• Scott Olsen: DST & Y Combinator: A (VC) Industry in transition
• Brandon Watson: Why developers shouldn’t listen to Scoble

January 2010 was the last month that advertising revenue was greater than virtual goods. Since then, it’s been nothing but micro-transactions of toys, coins, weapons and levels. Flurry conducted the research using data from social networks and social gaming applications with a combined reach of 2.2 million daily active users. The study didn’t look at Android because the platform doesn’t currently support in-app purchases.

This shouldn’t be a complete surprise. Virtual goods are a major source of revenue these days that’s expected to jump to $2.1 billion next year from $1.6 billion this year, up 31 percent, according to a report from Inside Network.

The report says a lot about the growth of virtual goods, and underscores the point that mobile social gaming, like social gaming on Facebook, is set to be very lucrative. It helps put DeNA’s purchase earlier this week of Ngmoco into better perspective. Ngmoco said earlier this year it makes 40 percent of its revenue from virtual goods purchased in-game.

It also suggests there’s a lot of missed opportunity in mobile advertising. Programs like iAd and Google’s Admob hold the promise of generating more revenue for app makers. And Android ads seem to get significantly more clicks, according to one research study.

The latest figures suggest that advertising agencies are still not quite sold on the overall viability of mobile ads, said Peter Farago, VP of Flurry. He believes as mobile social gaming gains even more momentum, advertisers will grow more enamored with mobile advertising. As a result, ad revenues will start to catch up to virtual goods again over the next couple years, he said.

Related research from GigaOM Pro (subscription req’d):

• The Real Impact of Facebook’s New Approach to Gaming
• How to Market Your iPhone App: A Developer’s Guide
• Why Microsoft’s Mobile Gaming Strategy Is a Mistake

Ngmoco, an iFund company funded by Kleiner Perkins, has had a string of hits such as We Rule, Rolando and Topple on the iPhone and is now poised to begin selling apps on Android after a reported investment from Google.

DeNA, which runs a popular social platform called Mobage Town, has bought a number of social gaming companies, including Gameview and AstroApe and also invested in Aurora Feint. The company is looking to compete with Facebook game maker Zynga, which is branching out into mobile, and companies like Disney, which recently bought Tap Tap Revenge maker Tapulous and social game maker Playdom in July. Google has also gotten into the act, buying SocialDeck in August.

The bet is that social gaming is moving to mobile phones, which, while small compared to Facebook, potentially has a larger audience as more people buy smartphones. PopCap Games recently shared that 25 percent of its revenues now come from mobile titles. Other non-gaming companies built on the web are finding success branching out their models to mobile, like OpenTable, which is increasingly booking reservations via its mobile app.

It makes sense as social games on Facebook have continued to struggle, with 16 of the top 25 games losing users in September. The latest figures continue a slide that began earlier this spring, coinciding with the rule changes by Facebook removing third-party notifications.

Shifting to mobile not only frees game developers from their dependency on the dominant social network, but allows them to build games that are more personal, reaching players wherever they are. With the rise of app stores like Apple’s App Store  and Android Market, game makers also have a reliable way to distribute their games and monetize them. As games follow the rest of the web to mobile devices, the opportunities to make them more context- and location-aware will also make them more interesting and perhaps, more profitable.

Related research from GigaOM Pro (subscription req’d):

• The Real Impact of Facebook’s New Approach to Gaming
• How to Market Your iPhone App: A Developer’s Guide
• Why Microsoft’s Mobile Gaming Strategy Is a Mistake

“Most negative reviews are from people who I think who were expecting a fundamental new technology, not a new user experience,” he said in a conversation with me. “I remember the same type of commentary around when the iPod touch launched.” Of course, as we all know Apple has since sold many millions of those iPod touches.

Young, who just closed a $25 million round of financing from Institutional Venture Partners and previous investors Kleiner Perkins Caufield & Byers, Norwest Venture Partners and Maples Investments, believes that a big portion of the mass market of buyers are going to find the iPad “magical.”

“The iPad is going to occupy a different part of a user’s life — it will be at the intersection of your home laptop and netbook and personal game console,” he said. Unlike most, who are going to rebuild their apps for the larger screen resolution, ngmoco has devised a three-step strategy for targeting the iPad:

* Adapt six of its major titles to iPad specifications and have them available for download alongside the device’s launch.
* Enhance its games to take advantage of the large screen real estate and also augment them with other iPad-specific features.
* Once iPad has scale or shows a trajectory of scale, build new applications specifically for that platform.

Young isn’t the only CEO of an iPhone games company who is thinking differently. William Volk, CEO of San Diego-based PlayScreen, explained to me that the iPad represented an opportunity to create a whole new kind of game. In a recent blog post Volk wrote,”The big screen and connectivity makes it a natural for social and team gaming. Think of board games, MMORPG’s and card playing.”

Like Volk and Young, I am very excited about the iPad, and am wondering what different types of apps can be developed for this new platform.

If you want to talk to me about these new experiences, apps or the iPad, drop me an email, connect with me on Twitter or simply leave a comment.

Related GigaOM Pro content (sub req’d):

Is There Any Demand For a True Gaming Phone?

The acquisition brings together two of the most significant developers in App Store history, both of which have built their considerable reputations exclusively through their efforts with the iPhone and iPod touch. It’s a step that represents a big milestone in the life of the App Store’s maturing ecosystem.

On the surface, it doesn’t appear at this point as though the merger will affect what most App Store users see. According to ngmoco’s CEO Neil Young:

Freeverse, much like us, is comprised of true game-makers. Now with our combined forces, their titles can reach more people and the talented folks at Freeverse can keep doing what they do best, which is making great games.

Freeverse won’t undergo any changes in terms of its name, branding or management now that its owned by ngmoco. All Freeverse games will likely now include Plus+ network features, which allow gamers to have a more social experience akin to an Xbox live for iPhone users. Freeverse was already a partner involved in that ngmoco-started endeavor, beginning with Flick Fishing.

Even if the effects of this acquisition aren’t immediately apparent or even visible to the average consumer, that doesn’t mean this doesn’t represent a significant change in how the App Store operates. Freeverse is just the beginning for ngmoco, and a way to diversify its brand. The maker of Eliminate Pro and Touch Pets Dogs has itself acknowledged a shift towards producing primarily free-to-play games in the press release announcing the acquisition, which depend on additional purchases of in-app content to generate revenue:

Last year ngmoco added top executives from the games, platform technology and web sectors and launched its leading player network, Plus+. The company shifted its production structures to build free-to-play games.

Now it can offer more traditional single-purchase games via Freeverse to get the best of both worlds while establishing strong, coherent brand identity. It will also quite easily be able to adopt and implement one model over the other if either one becomes much more obviously profitable or preferable to consumers.

Mergers and acquisitions will help smaller studios like ngmoco that made their name on the App Store go toe-to-toe with big production studios like EA Mobile and Gameloft, which were established players long before Apple’s mobile gaming device lineup ever existed. It’s good news for App Store shoppers, since ngmoco has been nothing but innovative to date and should now be better able to continue bringing quality titles to market.

But it’s also a sign that the tumultuous, super-heated forge that was the App Store in its inception is cooling, and that the landscape is taking on a much more static guise. A status quo is asserting itself, and with that, a definite aristocracy of content providers that will become harder and harder to knock off their perches. Games will become more less varied and surprising, but quality will improve.

I hesitate to comment on whether or not this is ultimately a good thing for iPhone users, but I think it is. As with any new market, the frontier days are fun, but maturity and establishment brings with it more focused efforts at improving quality and lowering cost for consumers. It’s time the App Store started getting much better at what it does well, even if some innovation is lost in the bargain.

Related GigaOM Pro Research: Is There Any Demand For a True Gaming Phone?

That’s a huge step for the micropayments business model made possible by the introduction of in-app purchasing in iPhone OS 3.0. It marks the first real evidence that developers can make good money offering a “freemium” model on the iPhone platform, with users getting the initial product for free, but paying for in-game rewards and additional content.

ngmoco appears to have found the sweet spot in add-on content where users don’t feel like they’re being extorted by a game’s in-app purchasing system. Eliminate Pro uses a system in which players earn rewards for in-game achievements that can be used to purchase armor and weapon upgrades. The catch is that you only get a certain amount of time during which game play earns you points. You can keep playing for free, but in order to get more rewards, you have to pay for more usable time.

Users can buy blocks of active time using the in-app purchasing system, in $1, $10 and $30 dollar increments. Players seem to have taken a shine to the system, since in-app purchases alone account for all of Eliminate Pro’s gross revenue. ngmoco also has a strong community and social media promotions effort in place behind the new title.

The company’s other title that depends heavily on in-app commerce, Touch Pets Dogs, hasn’t yet mirrored the success of Eliminate Pro. It hasn’t been available in the U.S. store for quite as long as Eliminate Pro, but I suspect the fact that its target audience skews much younger has more to do with its weaker performance. Eliminate players are far more likely to be in a position to have access to a pay-capable iTunes account.

No doubt ngmoco and other developers will try to repeat the success of Eliminate with other apps based on the same model. Personally, I’d be happy to see more games along the same lines, so long as developers remember that “freemium” does not mean “artificially handicapped.” Eliminate Pro works so well because it’s fun even if you don’t make use of the in-app purchases. As a result, users feel that ngmoco is operating in good faith and are willing to spend money on enhancing their experience.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How to Market Your iPhone App: A Developer’s Guide
• An overview of the photo and video app market
• Takeaways from mobile’s second quarter