Mobile Apps - Not a promising future

At the Mobile 2.0 conference in Berlin this week, there was a definite downbeat view of the prospects for mobile application developers.

It's not hard to see why. In the Apple App Store last week, the average price of the top 50 paid apps was only €2.17, with over half of the applications priced at €0.99. At this rate, a developer would need several thousand downloads to cover his or her costs after Apple takes its cut. Another statistic mentioned was that only 1,000 of the apps in that store have more than two downloads per week. So very few are going to reach a break-even level. Even large software houses are unsure about mobile application development. A recent report suggested that mobile game developer Gameloft was withdrawing from Android development.

Before you argue that there are other revenue streams besides asking the subscriber to pay, note this comment from Chris Wade (CEO of ShoZu): an application will need over one million users per month to attract any sort of interest from advertisers.

The upshot of this is that the mobile application development space will polarise into two camps. The first will be the hobbyist developers, who will continue to develop mobile applications for the sheer love of tinkering with technology. The other camp will contain developers who do mobile apps as part of a larger multi-channel development.

From the point of view of the app stores themselves, there are obvious problems. In order to have a successful store, you need to attract developers. This is done by providing them with simple distribution mechanism, a large market of customers willing to buy their products and excellent tools to work with. Some of these are going to be difficult to achieve for most players thinking about jumping into this space. Ilja Laurs (CEO GetJar) estimated that only five app stores would survive in the long term.

There was no mention of the possibility of the existing content aggregators getting into the business of aggregating applications, but I suggest that it is only a matter of time before this happens. This may simplify the route to market issue.

But above all, a developer has to decide where to put his or her limited resources, and this means selecting one or two platforms to support. This is most likely to be the iPhone and Android, despite the completely different development environments. Until device fragmentation goes away, then mobile apps may join that long list of unrealised potential so familiar to us in the mobile industry. I hope that this will not be the case.

Links:

Mobile 2.0 Content and Services - An IIR Conference - http://bit.ly/4HXJSx

Gameloft reducing Android development, points up Android Market weakness - San Francisco Chronicle - http://bit.ly/4SuCnX

App Store: Too Many Applications

A recent article on Fierce Mobile Content points out that the number of applications in the Apple App Store has passed 100,000. This is an incredible number of applications and raises a whole lot of questions about the mobile application ecosystem.

With so many applications available, there is bound to be a wide range of quality, from the excellent all the way down to the truly awful. In addition, there will be a large degree of overlap in functionality contained in apps in a given genre. For a mobile application developer, it is going to be difficult to differentiate his or her application from the crowd.

From the perspective of the consumer, finding the right application in all this noise is going to be increasingly difficult. So we have a two sided discoverability problem, for consumers finding suitable applications and for developers finding customers.

However, the biggest problem that has been pointed out by a number of commentators is how the developer can establish a sustainable business model, and I have yet to see concrete suggestions about how to address it. The price point of between US$0.99 and US$4.99 is quite low, given the amount of effort and cost that it takes to deliver a mobile application. Without a sustainable business model, are mobile apps going to be stuck either as an adjunct to a PC application, an extension to a web site or as a hobbyist experiment?

App Store officially surpasses 100,000 iPhone applications - http://bit.ly/3ZvY2g

Not all data has the same value

There is considerable interest in the availability of the iPhone from Orange in the UK. What is engaging minds is that "unlimited" data plan doesn't really mean unlimited. It actually means 750Mb per month.

This highlights a key problem with opening up a mobile network to full internet access: not all data on a mobile network has the same value. There is a real problem with this as far as a mobile network provider is concerned. For example, the Short Message Service (SMS) carries small amounts of data, yet can be charged per transaction to the subscriber. On the other hand, Youtube is a very high bandwidth application, but a mobile operator would be hard-pressed to charge similar tariffs for this traffic.

Unfortunately then, consumers want access to these high bandwidth applications, yet do not want to pay for such access.

This has a knock on effect into the mobile application space. The vast majority of apps are free, and those that are chargeable, the charge is very low. So how can developers and mobile network operators justify the investment?

Orange defends data limits in its UK iPhone deals: http://bit.ly/1RKoEB

Going Mobile

Welcome to my blog!


I'm very interested in the whole mobile internet. I have been working in the mobile space for several years with ChangingWorlds and now Amdocs, so have seen the evolution of mobile data services from the old WAP decks to the latest smartphones.


Mobile apps are also very interesting, given the success of the Apple iPhone. However, I don't understand how a developer can make any serious money out of it. There is also the OS fragmentation problem, the old mobile bugbear to contend with.


So I hope to explore this and other developments over the next while!


[Disclaimer: This is a personal blog expressing my opinions. They are not the views of my employer, Amdocs]