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