What kind of person clicks on ads? When I talk to ad companies, there’s a lot of discussion about how ads are supposed to be relevant, targeted based on user intent, and so on, but I’ve never entirely shaken the suspicion that the real answer is: Suckers.

That suspicion? A company called Criteo just released some research saying it’s pretty much a myth. Keep in mind that Criteo offers ad retargeting for e-commerce sites (which usually means targeting ads at people who visited a site but left without making or completing their purchase), so it’s not exactly surprising that the company would make this argument. On the other hand, the research is supposedly based on the 147 million unique browsers who saw a Criteo retargeted ad in the first seven days of March, so there’s some real data here.

Specifically, Criteo is disputing what it calls the “myths” about people who click on ads, as embodied by a 2008 comScore whitepaper called “How Online Advertising Works: Whither The Click?” Criteo argues that clickers are actually much more valuable than most folks in the industry think.

You can read the full paper embedded below, but here’s a quick summary of the myths (in bold), followed by Criteo’s refutation.

• “People who click don’t buy.” comScore’s research showed that people who click on ads are usually younger browsers earning less than $44,000 per year — “hardly an attractive target segment for most advertisers.” Criteo, however, notes that these demographics are just a proxy for more direct measurements of user value. The company says that in its study, it found that clickers buy three times more frequently than non-clickers.
• “Nobody clicks on ads anymore.” In Criteo’s research, it found that 43 percent of regular buyers on its clients’ sites click on the company’s retargeted ads. (The number is 33 percent for occasional buyers and 15 percent for non-buyers.)
• “A small number of people are responsible for a disproportionate number of clicks.” Criteo isn’t really disputing this idea, since it found that 20 percent of browsers accounted for 50 percent of clicks. However, it says this isn’t a problem, because it represents “a classic exponential distribution.” In fact, the company claims that a small number of people are similarly responsible for a disproportionate number of sales.
• “People who click a lot don’t buy a lot.” In Criteo’s data, the more people clicked, the more likelier they were to buy.

Are you convinced? Well, you might be thinking that Criteo is looking at a relatively narrow slice of the audience, so it’s hard to generalize. In fact, that’s almost Criteo’s point — it’s not saying that all clickers are valuable, but that clickers on the right kinds of ads are more valuable than you think:

“Nothing here should be taken to cast doubt on comScore's original paper, which was based on the performance of low-CTR, branding-oriented advertising. However, the clear message is that their lessons cannot be applied to properly-executed performance display advertising.”

One of the more innovative moves in mobile commerce has been the rise of services like Square, PayPal's Here, iZettle, Payleven, and mPowa, which are based around using a dongle to turn a smartphone into a payment processor. Now Prizm Payments, an India-based payments company, is eyeing up how to bring that concept to its home market’s 670 million+ mobile subscribers, by offering a similar service that will work not just with smartphones, but with the feature phones as well.

A limited rollout of its service, covering about 200 merchants, is expected to begin this month, with a wider-scale deployment coming down the road. The move comes at the same time that Prizm, which counts Sequoia Capital India as one of its main investors (others include Axis Bank and Silicon Valley Bank), has hit other milestones the point to a rising use of non-cash payments in the country: Prizm is on track to process $50 billion in transactions this year, up from $35 billion last year; and it now has 30,000 point of sale processing devices and 10,000 ATMs in the country.

And Prizm is also gearing up for a new round of funding that sources say could raise between $100 million and $200 million to help fund new payment innovations like mobile payments, as well as a bigger drive into e-commerce and international expansion. The Indian telecoms giant Tata Communications is among those that have been reported to be interested in making a strategic investment.

As with Square, Prizm’s dongle-based payment service would be targeted at those merchants that either currently lack the facilities to accept card-based payments already, or want added functionality to accept them on the go, such as in the case of deliveries, says Loney Antony, one of Prizm’s co-founders and managing director of the company.

Prizm has not yet spelled out many details about the sevice, although it’s ralready listed as a partner for one dongle provider in the country, mswipe. Antony says the move to offer mobile payment services is part of a bigger strategy to target mobile with other with other financial services like money transfers and bill payments — effectively a move to transform people’s phones into additional ATM terminals.

The decision to focus on feature rather than smartphones is down to the bare facts of the mobile economy in India, Antony says. Indeed, although Google has made some headway with Android in the country, people are still mainly using feature phones in India. In the first quarter of this year, smartphones only made up just over five percent of handsets sold in the country. Samsung accounted for about 40 percent of those, with Nokia at about 26 percent, according to CyberMedia Research.

“We are focused on moving away from smartphones and more on something that the majority of people can use,” Antony says of the emphasis on payment services that work with feature devices. “Any mobile payment service [in India] would have to work on a feature phone if we want it to become popular.”

India is, after China, the second-biggest mobile market in the world, and it’s growing fast, with some 6.5 million subscribers joining the ranks of mobile users in India in the month of April alone, with around 80 percent of them on prepaid services.

But approaching something like mobile payments will come in gradual steps. One of the bigger issues is that the market is still largely dominated by cash, with card payments still relatively nascent. Antony estimates that right now there are about 280 million debit cards in circulation in the country, with an additional 18 million credit cards on top of that. But with a total population of over 1 billion, "We have a long way to go," he says.

Signs are pointing in the right direction, though. Antony says that currently the number of cards in the market is growing at a rate of 26 percent, with 50 million cards getting added last year. The fact that people are using them more for purchases, bill payments and other services is also having a knock-on effect to people getting more used to making other non-cash transactions around e-commerce. E-commerce, Antony notes, is a market that is currently generating around $10 billion in revenue annually in India and is growing at a rate of about 35 percent annually.

Outside of India, Antony says the plan is to extend its payments platform into Southeast Asia and Africa, specifically markets that have yet to see a lot of development in card-based payments and therefore don't have any established leaders in the field yet, he says.

Editor’s note: Brad Spirrison is the Managing Editor of mobile app discovery services Appolicious, AndroidApps.com (which includes the Appolicious Android App) and AppVee. This is his third year of writing a semi-annual TechCrunch post on top mobile apps. 

Halfway into 2012, there are now more than 1.2 million mobile applications available to download to iOS and Android devices. With so many options literally at our fingertips – including dozens of worthy titles introduced to us each day – the task of compiling a mid-year "best of" list of new apps is more challenging (and enjoyable) than ever.

Out of the hundreds (if not thousands) of titles worthy of inclusion, our favorite 20 iOS and Android apps released so far in 2012 can do everything from appraise the value of a home merely by taking its picture, to supplying users with loyalty schwag merely for checking-in to their favorite TV shows. We also salute a highly anticipated game sequel that somehow catapulted beyond its otherworldly hype.

A quick primer on our methodology before we get going. All apps picked were either released or significantly updated between January 1 and June 30 of this year. Titles that debuted on iOS or Android in 2012 that were previously available on another platform are eligible for inclusion. All of our selections were sourced, ranked and finalized by Appolicious Advisors and members of our community.  In all, about a dozen members of the Appolicious editorial team offered their favorites. We also surveyed the most active and influential users of Appolicious sites and applications. We did not account for the number of app downloads or overall popularity. Our qualitative assessment is based primarily on the production value, utility and creativity of baked into each cited application.

Let's get going.

Best iOS apps
Camera Awesome (iPhone, iPod Touch: free)
While Instagram's sale to Facebook dominated the headlines earlier this year, the best new app of 2012 so far is another photo-sharing service that actually helps you take better pictures. Created by 10-year-old photo-sharing site SmugMug, Camera Awesome is a revelation in iPhoneography and yet another reason why many of us can ditch our digital cameras. Beyond Camera Awesome's stunning interface, there are several ways this app can "awesomize" your pictures, including automatic levelization and color adjustment. All presets and filters can be purchased in-app for $9.99 (or a la carte at 99 cents a pop). The ability to capture videos up to five seconds before you press record is also a great option. Finally, Camera Awesome makes it dead simple to share photos across your favorite social networks (Instagram included).

Pocket (Formerly Read It Later) (Universal: free, also available for Android)
Independent "read later" apps may become an endangered species this fall when Apple incorporates its Offline Reading List into Safari as part of iOS 6. Until then (and perhaps thereafter), the best bookmarking app for your buck (actually free) is Pocket. Formerly known as Read It Later, the app's April rebrand involved more than just a name-change and price reduction. Pocket's new features, which include the ability to seamlessly view videos and images as well as grid-based article lists, do not undermine the app's simple and elegant interface.

Khan Academy (iPad: free)
The best thing about this app is how it doesn't clutter or distract from the expert video tutorials that are produced by next-generation educator Salman Khan. The more than 3,200 educational videos that touch on everything from "Getting a seed round from a VC", to  "Earth Formation" to "The Bay of Pigs Invasion" are categorized within a simple taxonomy. The YouTube-hosted videos that contain subtitles are extensively logged, allowing users to quickly and easily locate a phrase or passage that may have gone over their heads.

TouchTV (iPad: free)
From customized news provider SkyGrid comes TouchTV, which beautifully showcases video clips from broadcast and cable networks onto the iPad. TouchTV runs video clips (typically up to five minutes in length) from 16 official providers including ESPN, Bloomberg Television and Jimmy Kimmel Live. While downloading TouchTV alone is not enough to "cut the cord" from your satellite or cable provider, the app offers a glimpse of what an app-enabled television universe can look like. TouchTV joins video discovery services like Showyou and Squrl (which each received significant updates this year) as among the best iOS apps to currently watch on Apple TV.

Any.Do (iPhone, iPod Touch: free)
Our favorite Android app of 2011 in June finally made its way to iOS devices. And it was worth the wait. Any.Do, which is backed by Google Executive Chairman Eric Schmidt, is an uber-productivity app that lets you easily create and complete tasks with the swipe of a finger. The app's voice-dictation technology reliably records tasks without a user needing to type anything. You can also share your to-do lists with friends in the hopes they might help out with whatever needs to get done.

Highlight (iPhone, iPod Touch: free)
Coming out of the South By Southwest bracket of the 2012 mid-year app tournament is this social mobile local app. Highlight alerts you when a Facebook friend or individual with similar interests is nearby, and lets you learn more about other Highlight users when they are in your vicinity. Like similar services including Sonar, Banjo and Kismet, Highlight is only effective if there is a critical mass of other users in your area. While each service has its strong points, Highlight looks to have the greatest chance of any to crossover to the mainstream.

Viggle (iPhone, iPod touch: free, also available for Android)
Receiving discount cards from the likes of Amazon, Starbucks and the Gap just for watching TV for many could be considered the American dream. Viggle makes it a reality by letting users check-in and earn loyalty points for watching their favorite programs. The app performs reliably, while offering additional features including trivia questions, polls and curated tweets as gravy.

LinkedIn Update (Universal iOS: free)
The best thing about LinkedIn's April iOS update is that the app is now finally compatible and optimized for the iPad. Presumably inspired by Flipboard (where it has a key presence), LinkedIn functions best as a social magazine on the iPad. The magic of LinkedIn on the iPad is how it integrates content shared by your connections with the ability to map common relationships with the sender in ways not possible via any other app or site.

Clear (iPhone, iPod Touch: free)
Clear is the to-do list for those who just want to get their stuff done and move on. While it lacks many of the features of heavy-hitter task-managers like Omnifocus and newer contemporaries like Any.Do, Clear excels in letting users quickly create categories and list the things they need to do that fall under those categories. The app's beautifully designed interface also lets users sort these listed items by priority and quickly swipe to erase them when they've been completed.

HomeSnap (iPhone, iPod Touch: free)
While HomeSnap can't do much to bring the nation's housing market back to pre-crash levels, the app – with an assist from augmented reality – can help users determine the value of a home merely by taking its picture. In addition to financials, you can also see school information, historical data and the number of bedrooms and bathrooms in a given home. HomeSnap is not 100 percent reliable, but neither is information provided by a seller or broker.

Best iOS and Android games
It's no accident that most of the top games to come out so far in 2012 are available on both iOS and Android devices. While there are constraints involved in making sure games are compatible across myriad Android form factors and operating systems, developers realize they need to embrace the platform in order to achieve a critical mass of users.

Draw Something by OMGPOP (Universal: $2.99, also available for Android)
While the momentum for this touchscreen-based and unofficial variation of Pictionary slowed down after it was acquired by Zynga in March, there are reasons why Draw Something generated tens of millions of downloads in only its first few weeks (faster than Angry Birds, Instagram, and any other app in history). It's really fun to play! The premise of the game is simple enough for a five-year-old to pick up. Further, Draw Something's social integration via Facebook and email makes it easy to play the game with a friend or stranger regardless of what kind of iOS and Android device they own. Don't own a device on either platform? No worries, you'll soon be able to watch the upcoming Draw Something primetime game show.

JAZZ: Trump's journey (Universal: $2.99, also available for Android)
Loosely based on the life of Louis Armstrong, JAZZ: Trump's journey plays well as a "greatest hits" for platform games. With beautiful graphics that capture 1920's era New Orleans, great controls, and of course a killer soundtrack, Trump's journey has enough features and depth to appeal to established gamers while also serving as a spirited and soulful introduction to newbie players.

Angry Birds Space (iPhone and iPod Touch: $0.99, iPad: $2.99, Android smartphones: $0.99, Android tablets: $2.99)
With a launch promotion that was literally out of this world, there was a concern that Angry Birds Space wouldn't live up to its hype, or just be a slight variation of previous versions of the game. That fear was flung into the stratosphere once we actually began playing it. With new gravity-based mechanics, awesome new birds, a darker color palate and bizarrely amusing space aesthetics, Angry Birds Space is arguably the most refreshing and enjoyable title in the franchise.

N.O.V.A 3 (Universal: $6.99, also for Android)
If you are a fan of first-person shooters, than this is the game for you. Developed by Gameloft, N.O.V.A. 3 more than any other title available on mobile devices moves and feels like a console game. N.O.V.A. 3 has you blasting aliens and enemies through a number of planets (including a war-torn Earth). The multiplayer aspect of the game will have you sharing your battle with as many as 11 other players. Each beautifully animated level takes about 30 minutes to complete, offering a lot of bang for your seven bucks.

Spellsword (Universal: $0.99)
With furious and addicting gameplay, unique mechanics, and retro graphics and music, Spellsword is a fresh new platform game contained within a sword and sorcery kind of environment. Use your single sword to strike down enemies, and launch fireballs along the way. As you proceed through the missions and maps, new spell cards will be introduced along with new enemies. The best thing about Spellsword, at least for more competitive gamers, is that it contains no in-app purchases, and all of the achievements must be earned by the player.

Best Android apps
Many of the best new releases on Android – including three of our five favorites – were originally created for iOS devices. When the best titles are finally available on multiple platforms, we all win.

Flipboard (free)
Our favorite iPhone app of 2011 finally and officially arrived to Android in June. The socially curated magazine – which beautifully presents news, photos and status updates shared by your social graph – included YouTube integration as part of its Android launch (Google+ integration arrived a few days earlier). Flipboard is also the best way to read content from third-party publishers on mobile devices, including the New York Times which on June 28 debuted its NYT Everywhere service to subscribers within the app.

Instagram (free)
Instagram's arrival to Android was a positive development to say the least for the photo-sharing pioneer. Within one week, Instagram attracted more than 5 million downloads. A few days later, the company was acquired by Facebook for what was at the time a 10-figure valuation. The company's immediate triumph illustrates how apps need to be available for both iOS and Android devices to emerge as a true pop-culture sensations.

Google Drive (free with subscription, also available on iOS)
In our two months of using the service, we are finding that Google Drive is a superior and more cost-effective solution for storing and sharing documents than Dropbox. For individuals and organizations that already rely on Google Docs, migrating to Google Drive is a no brainer. The app works seamlessly across all of our Android devices.  Now that the service as of June 28 is available to download to iOS devices, there is not much else standing in the way of market domination.

Airbnb (free)
Airbnb's arrival to Android in January, after previously being available online and via iOS devices, was more than just a copy and paste job from one platform to another. The service, a vacation-rental marketplace, for the first time made it possible for property owners and travelers to quickly instant message each other for questions or go over any issues that arise during a stay. There are more than Airbnb 200,000 listings across the world, as well as curated travel recommendations from the likes of Ashton Kutcher and Jack Dorsey.

Chrome (free on Ice Cream Sandwich devices only, also available on iOS)
If you use the Chrome desktop browser and own an Android smartphone or tablet powered by Ice Cream Sandwich, owning this app is a no-brainer. The Chrome mobile and desktop apps interact seamlessly with one another, meaning you can access your bookmarks and browsing history on the app. The app also lets you swipe between tabs without ever having to go to the tabs menu. The Chrome app also supports voice search, bookmarking and private browsing. Like Google Drive, Chrome launched on iOS devices on June 28 during Google I/O 2012.

Tmura, an Israeli non-profit, is closing on its 10-year anniversary. In a decade’s worth of work it has contributed a whopping $6.3M+ to educational programs.

The extraordinary amount isn’t the result of efficient fundraising, rather, of having been allotted small amounts of options by early-stage startups. Tmura then exercises these options when the startups see a liquidation event.

Out of a portfolio of 240 companies, 40 saw exits, the most recent of which XtremIO’s acquisition by EMC netted Tmura $450,000.

Baruch Lipner, Executive Director at Tmura, attributes the good fortune these companies have seen to a combination of karma and an improved corporate culture in participating startups. Why argue with success, right?

Over 100 educational organizations have received contributions from Tmura in its 10 years of activity. These include:

• College4All: An enrichment program focusing on students with potential to excel.
• Krembo Wings: A national youth movement for children with special needs.
• Machshava Tova: Computer centers in peripheral areas aimed at ‘narrowing the digital gap’.
• Shiur Acher: Volunteers from the hitech industry delivering lectures in schools.

Participating companies can decide themselves to which project(s) funds from their exits are allocated, or allow Tmura to do the choosing itself.

Are there similar organizations in your area that make use of startup exits for good in the community? Share with us in the comments below.

Disclosure: I’m on the Advisory Board of Tmura.

Editor’s note: Mitchell Weisman is CEO at global marketing and digital advertising company LifeStreet Media.

Have a mobile app? Wondering if advertising can help you make money from that app? Here are eight must-know tips to help you turn mobile app inventory into dollars.

1. It takes customers to make money

While this is a piece about monetizing apps, the amount of money you can generate from an app is highly dependent upon the number of users you have. Once apps achieve popularity, their success spirals. In order to reach critical user adoption levels, engage in user acquisition best practices, from cross-promotion to viral distribution, and from PR to paid in-app advertising. Try multiple channels to see what works for you, and stick to vendors who allow you to pay based on the performance metrics that are relevant for your unique business needs. For example, don't pay for clicks if what you really care about is installs.

2. Know your customers – and their value

Not all customers are created equal. Know the lifetime value of your customers by the channels in which they were acquired. For example, let's say you can acquire a "high value" customer – say someone worth $6 in lifetime value — for an acquisition cost of $3, and let's say you can acquire a "low value" user worth $2 in lifetime value for an acquisition cost of $1. Don't think that pursuing one customer or the other is an either/or decision. You make $3 in profit from the "high value" customer and $1 in profit from the "low value customer." Both sets of customers are profitable, so pursue additional acquisition of BOTH types.

3. Averages lie

Whatever you do, do not fall into the trap of averaging your customer acquisition costs — nor your user values. In the above scenario, if you average the value of your customers, you might attempt to pay $2 for customers worth "an average of $4." At that price you probably couldn't get the $6 high value customer because your bid would be too low to be competitive and you'd be spending $2 to acquire a customer worth exactly that – with no margin leftover for you.  Needless to say, this is not a profitable path for user growth.

4. Free is often best –  but not always

What you charge for an app should be based largely on how users engage with it. For example, if people use your apps just a few times, an ad-supported model probably doesn't make sense, as you’ll earn just pennies per user. It makes more sense to charge 99 cents, $3.99 or another small fee up-front. Even though sales at the paid price will be a fraction of the free, ad-supported version, the total revenues are likely to be higher. However, if you have an app that is likely to be used many times – and this is the majority of apps – then free is probably the best option for you. And of course, free trials and freemium options are also great avenues for getting users hooked on your services.  After that happens, there is a much higher chance that they'll actually spend money on your app. A recent piece by Infoworld does a good job of discussing this user engagement model.

5. Don't play favorites with money

Too many app developers get caught up in the decision of whether to use advertising or virtual currency to monetize their free apps. Stop fretting about which is better. When it comes to money, all money is good.  Try both options – many of the top app developers use both of these channels and more. Fortunately, implementing advertising in your app can be self-serve and almost instantaneous. The risk is incredibly low to try it out and see if it works for you.

6. Don't play favorites with partners, either

Ease of setup is not a license to skip due diligence in monetization partners. You should do your research, select a number of potential monetization partners — and try out all of them.  Consider this app monetization speed dating. Test out several partners until you find the one or ones that monetize best for you.

7. It takes two to tango

Don't expect your monetization partner to do all of the work. You know your app better than anyone. Think critically about logical places and transition times for advertising. If you develop a game, consider placing ads at natural transition points between levels and/or at the end of a game. Think about when your users may be most willing to engage with ads, and place advertising accordingly. The result will be both a better experience for your users AND increased revenue for you.

8. Analytics reign supreme

It's absolutely worthwhile to spend the time and resources required to invest in solid analytics. Invest in internal analytics in order to truly understand user values, customer attribution models, and monetization payouts, and use the myriad of external tools available, from App Annie to Distimo, to help you make smart decisions about markets to pursue, platforms to prioritize, and other critical strategic decisions to make.

Given the explosion of smartphone adoption rates and app usage trends, it's an exciting time to be a mobile app developer.  Make the most of it!

Editor’s note:  GD (Ram) Ramkumar is a serial entrepreneur and computer scientist. He was founder and CTO of SnapTell (acquired by Amazon in 2009) and is now the Founder and CEO of Concept.io, a new mobile startup. He holds a Ph.D. in Computer Science from Stanford.

I started as a mobile entrepreneur in the pre-iPhone era in 2006 as the founder of SnapTell, the first successful mobile app in the image recognition space. SnapTell was acquired by Amazon's subsidiary A9 in 2009. In 2011, I left Amazon to join Charles River Ventures to start a new company, Concept.io, which launches later this year. I reflected on lessons learned before embarking on the new venture and wanted to share them with the community. This article shares lessons I learned and discusses mobile trends that have emerged since.

The Key Lesson: Choose a problem and frame it well

Our first product at SnapTell was a service that allowed consumers to send in a photo of a shelf tag in a store for comparison shopping. The service read text from the label using OCR, determined product and price, and returned product and price information to the user. The solution was slow and cumbersome. It only worked with high resolution images on high-end auto-focus camera phones. Only a few such camera phones existed in the market in those days, sold by Nokia, Sony Ericsson, and HTC.

We learned quickly that this was not the right problem framing. We found that it is better and more intuitive to recognize a product cover instead of a shelf tag. Technology called ‘image matching’ was shown to work in research labs to compare a camera phone image to a set of thousands of images. We set out to create a scaled version that works for millions of images. This time the problem was well framed. Over the next year, our team worked hard to create a solution that emerged soon after the iPhone App Store launched in 2008. The resulting product was the first iPhone app that allowed users to search for media items visually using pictures. After SnapTell's acquisition, the technology was deployed in Amazon's mobile applications.

We set out to create a scaled version that works for millions of images. This time the problem was well framed. Over the next year, our team worked hard to create a solution that emerged soon after the iPhone App Store launched in 2008. The resulting product was the first iPhone app that allowed users to search for media items visually using pictures. After SnapTell's acquisition, the technology was deployed in Amazon's mobile applications.

I learned some lessons out of the experience.

1. For a mobile app or product to turn into a sustainable business, it must support a daily use case that turns into a habit. Comparison shopping didn't provide a frequent use-case for most consumers.
2. Successful apps must create a "wow" experience and bond users emotionally. Having a great UX designer on board early is essential to a successful startup product.
3. It is important to identify a problem and focus on creating a solution for the consumer, rather than build technology and look for applications.

Emerging Mobile App Opportunities

The mobile ecosystem today is dominated by the app marketplaces of iOS and Android. Many new opportunities exist on these platforms, particularly to build "always-on services." Such services leverage strong API support in iOS and Android for sensors and wake-up mechanisms to serve the user contextually. Background location streams offer powerful semantic data. Background voice-over-IP and audio APIs support new use cases. Consumers that use such a service do not need to remember to launch the app. The service knows when it is useful and chimes in automatically.

The user goes about their daily life as they normally do. Mobile service apps of the future wake up and serve the user in context. For example, such services may (1) Let you know the dry cleaner is open and clothes are ready and available as you drive home; or (2) Tell you about traffic where you are headed for your commute; or (3) At a convenient time, let you know that a friend you wanted to speak to is available right now for a call. Early examples of always on services are the newly announced Google Now product, the iOS Reminders app and Highlight.. It's still early days with many services to come in the future!

Advances in Mobile OS

New features and APIs on the mobile platforms often make room for innovative services. iOS 6 announced the ability for Siri to launch apps (with the promise of more to come), tighter integration of Facebook, more efficient access to Bluetooth, and support for Passbook, a ticket and payments organizer. As an example, apps will emerge that integrate with Passbook to facilitate smoother travel.

Conclusion

Despite our collective focus on technology and design, social science and human behavior remain critically important. Understanding consumer behavior and applying technology to serve users in context will be a theme for many mobile services to come. Creating a "wow experience" and a positive emotional response in the user is very important. Siri has been popular in part because it goes to great lengths to answer fun questions such as "what is the meaning of life?" Technology exists to serve humans, not vice versa, and this will play out in interesting ways as the mobile ecosystem continues to evolve.

The current generation of game consoles is getting a bit long in the tooth, but signs point to late 2013 as the earliest that a replacement for either the PlayStation or Xbox consoles will come online. But then something interesting  happened this past week, which could change the way that console makers think about their hardware and software service: Sony bought cloud gaming company GaiKai for $380 million.

Sure, rumors abound about what hardware, chips, and specs these devices will have when or if they’re eventually released. All indications point to about the same type of hardware development we’ve seen in past consoles — including high-performance, next-gen CPUs and GPUs to power even more robust gameplay and graphics capabilities. But if I were Microsoft or Sony right now, I’m not sure I’d be betting on an ever-more powerful box to power its new game platforms. In fact, I’d take a contrarian approach and make as lean of a box as possible, and put all the processing power up in the cloud.

Sony’s purchase of GaiKai could be a harbinger of things to come. For those unfamiliar, GaiKai provides a cloud-based service for accessing more than 40 popular video games online, without the need for any sort of fancy hardware. Early reports pointed to the possibility of extending PlayStation games to other platforms where games could be made available — including mobile devices, tablets, and kiosks — creating a sort of “PlayStation Anywhere” type of service. But I think the impact that the acquisition could have on Sony’s next game console could be even more dramatic.

Dumb boxes, smart networks

Console makers historically have relied on the razor/razor blades approach to selling game systems: Put out the hardware at a loss and make money back over the longer term through the sale of games and licenses. In the old paradigm, where they invested heavily in the type of bleeding-edge hardware necessary to power gaming experiences their customers demanded, that meant putting a lot of investment upfront in powerful CPUs and GPUs and seeing the cost of devices go down over time as the manufacturing process hits scale and component costs decrease over time. Roughly speaking, that’s been the general trend.

But what if those companies didn’t need to have all the processing rendered in hardware and could instead move the real heavy lifting to the cloud? To be honest, moving gaming to the cloud isn’t necessarily that revolutionary, because there are companies doing it already. There’s GaiKai, of course, but there’s also OnLive, which offers up its own service for playing cloud-based games on your PC, mobile devices, and a $99 streaming box. Also, the company plans to add support for its service natively on some connected TVs and other devices.

It’s that $99 gaming box which appeals to me, though, and it could be a good model for Microsoft and Sony to think about, as they ponder their own new game consoles.

The problem with cloud-based gaming

That said, there are a few arguments against selling a dumb appliance with processing done in the network. The big one is that doing so would dramatically reduce hardware sales in the short term — but that ignores the fact that for the most part those boxes are sold at a loss. No one makes money off new hardware in the first several years it’s released, if ever. Providing a box with just-good-enough connectivity and graphics rendering capabilities, and making it available cheaply, would be a more profitable step and would drive a lot more volume than building some sort of high-powered God Box and selling it for $299.

The bigger problem with cloud-based gaming is that the infrastructure just might not be there yet to support it. Let’s face it, a lot of gamers — even those who subscribe to Xbox Live — are still stuck on DSL connections, which might not support the type of HD-quality graphics game providers would like to build.

More importantly, though, no one has shown that cloud-based gaming can be done at true scale. OnLive has several million subscribers, but its true reach pales in comparison to the number of Xbox Live gamers who sign in daily. Providing the type of computing power necessary to serve tens of millions of gamers all playing at once is a big problem. Despite the GaiKai acquisition, Microsoft might be better equipped to deal with it than Sony, as the software giant has already built a giant virtual computing platform in the cloud with Microsoft Azure. For Sony it would mean a huge investment just to get the infrastructure to support cloud gaming ready.

Finally, there’s the potential cost to consumers, as ISPs begin to roll out tiered broadband plans, which charge consumers more for excessive bandwidth usage. Since games would be streamed in HD, that means a huge amount of bandwidth per month for even somewhat casual gamers. And no one — not Sony or Microsoft — wants to roll out a service which is going to create huge cable bills for their best customers.

New gamers, new business models

At the same time, the potential for a low-cost game console that put processing in the cloud could open up the market for new customers, particularly at a sub-$100 price point. And rolling out with that strategy would allow Microsoft and Sony to create gaming services that wouldn’t necessarily be tied to a certain device, and instead could be accessed even without a piece of proprietary hardware.

Making gaming a streaming service rather than based on the physical purchase of games also opens up new potential business models. Xbox Live already has a membership fee attached, and subscription games — where you get the software for free but then pay a monthly fee to access the game online — are nothing new, particularly in the MMORPG world. But without the need for physical downloads or actual distribution of discs to consumers, subscriptions could become even more popular for cloud-powered games.

I’m just going out on a limb here, and I’m sure Microsoft and Sony already probably have their plans mostly hashed out for the next generation of hardware. I’m just saying, it doesn’t necessarily have to be high-powered or expensive, especially if they want to reach a broader audience at less cost, and sooner rather than later.

I said in my review that the Samsung Galaxy S III is the phone you’ve been waiting for, and the same holds true in this latest episode of Fly Or Die. John and I took a look at the various specs, namely the NFC-style features and S-Voice, and we both walked away with a warm, fuzzy feeling.

To put it quite bluntly, the Galaxy S III is far and away the best Android phone you can buy today. Sure, the plastic back panel is a bit “chintzy,” as John would say, but that’s irrelevant when you look at the value in this phone.

NFC capabilities, including tap-to-share, TecTiles, etc. work very well, and are incredibly easy — so much so that I believe my mom would be able to use them (and that says a lot). The display is gorgeous, the camera is excellent, battery life can hang, and it’s running the latest version of Android on an LTE connection.

There isn’t much more you can ask for. Two flies.

Editor’s note: Phineas Barnes is a partner at First Round Capital, worked at AND 1 from "day 2″ and founded a fitness video game company.

According to my twitter feed subscription commerce is an overblown, shark jumping smoke screen and the companies that created the model are abandoning it left and right.

The comparison to the flash sale model and to group buying seems to fit because the subscription commerce category has a few leaders and a ton of “me too” companies. On the surface it looks like all of them are just putting shit in a box and money in the bank but this is pattern matching gone wrong.

Data from Custora suggests that Customer Lifetime Value of repeat customers in commerce businesses is over 6x that of one-time buyers. Finding new ways to increase the “conversion” of one-time shoppers into repeat buyers offers tremendous upside. The most successful tactics go beyond simple discounting and build loyalty via increased touch points and better service — subscription services deliver here.

Let’s not point to jumping sharks just because there are a lot of fish in the water. When I think about the fundamentals of the subscription model and what makes it work, I see a massive opportunity to change the way consumers discover and engage with brands. The real question we should be asking about subscription businesses is are they more like the milkman or your favorite magazine?

The ShoeDazzle Mirage

Some say ShoeDazzle invented subscription commerce and has thrown away the model. Not True. ShoeDazzle is a great company, but it was never a subscription commerce business.

It has been reported that ShoeDazzle has over 10 million subscribers signed up to purchase $40 shoes each month and that the business now does over $5m a month in revenue indicating a 1.25% monthly conversion rate. But the key metric in successful subscription commerce businesses is not monthly conversion — it is initial conversion and percent of monthly revenue retained each month (aka churn.) If monthly conversion is your most important metric, you may have a great business, but you are no more subscription commerce than every traditional eCommerce company with a monthly newsletter.

RIP Milkmen – Replenishment is commoditized

I have also read that replenishment models hold the most promise in the subscription commerce space. I believe competing on convenience and price in a commodity, consumable category is suicide.

In these categories (food, razors and diapers etc) the consumer often knows exactly what they want and 9 times out of 10 it is more of the same thing they had last month except cheaper. It is true that people tend to consume these products at a steady rate and they do enjoy the convenience of not having to go to the store to replenish the medicine cabinet or the fridge when supplies get low. But, it is also true that companies like OrderGroove are making it possible for any eCommerce site to offer best in class “subscribe to it” replenishment on any item in their catalog as a retention tool. Also, Amazon does a better job delivering a new shipment just as the consumer is running out of an item than any subscription commerce company ever could. Amazon Prime is no joke when it comes to replenishment. I can have any consumable commodity item at the lowest possible price on my doorstep in 2 days and with the mobile app and one-click ordering, it is hard to beat Bezos and company on the convenience axis either.

Re-Imagine Publishing – Discovery is essential

They say sampling is all about merchandising and once the novelty wears off, these sites will face massive consumer churn and supplier fatigue. I say there is no better way to connect consumers with brands than through the magic of discovery. The best subscription commerce offerings could also be described as discovery commerce.

The key to the sampling subscription model is picking a market where the value proposition will work. This model does not work in every space. Entrepreneurs should look for markets with discerning customers who want to learn about their options and who value guidance in their choices. In verticals with lots of brands (fractured supplier base) driven by consumer trends (frequent new product introduction) the subscription commerce model is magic. If the products themselves can be experienced in a way that delivers immediate results (dog treats >; vitamins) you get even more leverage out of moving the experience of a product up to the top of the purchase decision funnel and surrounding it with high quality content.

Less burn per churn

The mission critical metric in subscription commerce is percent of revenue dollars retained per month (aka subscriber churn). Opt-in models like ShoeDazzle can not be managed to this metric and this is why they should not be considered subscription commerce offerings. For both replenishment and discovery models, some percentage of subscribers will cancel each month until you reach the floor of value where the remaining pool of customers believe the price, service and selection meet their needs over the long-term.

But, discovery commerce has a huge advantage when it comes to monthly revenue retention: Demand creation and capture.

Discovery commerce services help the consumer discover products and brands through curated samples and they create content to give customers the confidence to fall in love. Done right, the sampling service delivers the surprise and delight that generates loyalty (reduced subscriber churn), motivates engagement that drives social/viral distribution and (lowers customer acquisition costs) and creates demand for the products that are sampled. Businesses that capture the demand they create are on to something.

Some percentage of revenue is lost each month due to subscriber churn, but with modest conversion numbers the purchase activity of the subscriber base can can actually drive the average monthly value of a customer well above the price of the subscription – even net of churn. For example, let’s assume a discovery service offers a monthly subscription for $15 and the average basket size in their traditional eCommerce offering is $50. If churn is 10% per month and eCommerce conversion is just over 3% after 1 month, revenue retention for that month is 100%. In this example, conversion rates north of 3% deliver monthly revenue growth net of churn.

Curated subscribers convert better

As months go by churn will continue in the subscriber base, but the ability to create and capture demand can more than offset the financial impact of subscriber churn. Each month the remaining customers in a cohort skew further toward the most passionate people who are most loyal and most willing to buy. Each month, the company gathers incremental subscriber profile data and improves the personalization of the offer, builds trust in the brand voice and maximize demand creation by delivering discovery.

Subscription commerce is not a new model, and has always been about turning a single purchase decision into repeat purchase behavior. If the motivation to make a repeat purchase is price or convenience, you are going to see margin compression and lots of competition from traditional eCommerce players. Trying to compete on price is simply a race to the bottom. If you are moving the experience of a product up in the consumer decision funnel with a curated experience and capturing the demand you create through a traditional eCommerce offering, you are a discovery commerce company and you have a ton of opportunity ahead of you.

With Windows Phone 8′s launch fast approaching, it not exactly a surprise to hear that Nokia is slaving away on some new hardware. The Nokia Lumia 910 — which some suspect is a Lumia 900 meant for T-Mobile USA — was recently spotted thanks to Nokia’s Remote Device Access service, but that’s not all the Finnish company seems to have in the works.

A new device called the Nokia Lumia 1001 was also detected by one of Nokia’s remotely-accessible phones, and its significant model number jump could mean it’s the company’s first Windows Phone 8 device. Or does it?

If you’ve never had the chance to play with Remote Device Access it allows users to connect to a whole host of Nokia hardware from within a browser window. It’s ostensibly meant for developers to test their applications and code on real (if distant) hardware, but it also provides an occasionally neat glimpse into what Nokia is working on. Take the Lumia 900 for instance — then referred to as the “Nokia 900 Windows Phone,” its existence was detected by a device being controlled remotely late last year.

It’s worth noting though that devices like the Lumia 910 and 1001 aren’t directly accessible to users — instead, they’re spotted when a user commands one of Nokia’s devices to search for other Bluetooth-enabled devices nearby.

I was initially able to spot the Lumia 1001 (see above) while I was poking around with a Nokia 500. Just to make sure I wasn’t seeing things, I jumped into a different device (the Nokia N9, if you were curious) to see if the device in question was still hanging around.

At this point, there’s no way to discern any of the device’s particulars or even if it’s a real handset. Considering the sort of attention that the RDA service has been getting lately, it’s entirely possible that someone at Nokia has a sense of humor and changed one of the device’s names to “Nokia Lumia 1001″ just to mess with all of us.

That being said, there’s little question that Nokia is working on some Windows Phone 8 hardware behind closed doors, in preparation for the platform’s launch later this year. Longtime readers may also remember that Nokia switched to a “larger-is-better” numerical naming scheme last year, with their most premium handsets getting high model numbers.

So far, Nokia’s Lumia 900 sits at the top of the heap, but with Windows Phone 8 barreling down the pipeline, it wouldn’t be surprise to see Nokia bump up their model numbers for their newest breed of Windows Phones. After all, the existing version of Windows Phone is being left behind in favor of a more powerful, unified platform — one would imagine they would use a much loftier model number to signify that transition, so

It must be something in the air. A few weeks ago, ClickTale released a version of its visitor recording and activity heatmap product for the mobile web. On Thursday, we wrote about Delight.io’s service for recording user sessions in mobile apps. And now a startup called UserVOD is announcing the public beta of, yes, a product for recording user sessions in mobile apps.

Co-founders Zahi Boussiba and Yoni Douek were previously working together on a mobile social shopping app called  ShopTalk. One of the challenges they discovered was the fact that all the feedback was written or verbal, which could sometimes be hard to understand, and didn’t really convey the full user experience.

“If we really wanted to understand what they are doing with our app, the best thing to do would be to stand next to them and watch them,” Boussiba says. That’s where the idea from UserVOD came from. The pair wants to help developers “see” their users “without being next to them” (which is both impractical and creepy).

So when a developer installs the UserVOD SDK, they start getting videos recording each user session — showing where users tapped on each screen, where they got confused, and so on. For privacy, UserVOD automatically hides camera windows and passwords from its recordings, and developers can specify other types of information that they don’t want to record.

As for how it stands out against competing products, Boussiba says one of the company’s big accomplishments is that it enables recordings without noticeably affecting an app’s performance. (Also, as noted above, ClickTale is currently focused on mobile websites, not native apps.)

Future plans include an app marketplace where developers can find app testers, as well as a widget that enables those developers to collect video feedback — in other words, if you’re using an app and you encounter a problem, you can just record a video of your session, rather than trying to explain everything in writing. Boussiba says the company is also working on features that aggregate the patterns from all your videos, so that you don’t necessarily have to watch hundreds or thousands of them to get meaningful lessons.

If you want to see UserVOD in action, you can download its Draw Fast demo app, where you can play a Draw Something-style game, then watch a video of your session on the UserVOD site.