Posts tagged ‘Apple App Store’
App Store wars, predictions by CellStrat and suggested strategy
There is an excellent article in Business Week (April 6, 2009 print edition) this week on Mobile App Store wars by Reena Jana and Peter Burrows. Below is a summary with some additional comments by us. At the end we make some mobile app market share predictions for 2011 and suggest some strategic ideas :
Business Week article (“An All-Out Online Assault on the iPhone”) :
RIM, Nokia, Microsoft and Palm are planning an assault on the Apple’s Red-hot App Store by launching their own App Stores for mobile phones. Mike Lazardis, co-CEO of RIM is set to launch BlackBerry App World at this week’s CTIA in Vegas. App World will have minimum pricing of $2.99 per app and will provide 80% of the dev revenue to the developer vs Apple’s 70% rev sharing. This is bound to entice more serious App Store developers who like the higher cut in case of BlackBerry. Moreover the latter is more prominent in the corporate circles so is likely to get corporate-minded developers. Mike McGuire of Gartner estimates that there will be significant threat to the Apple App Store with these plethora of App Store offerings. No wonder then that Apple has released an enhance iPhone 3.0 with tons of new functionality for iPhone developers. Rumors abound of a new iPhone device come June – Apple WWDC conf is around that time so a likely point for new hardware announcement.
Apple has created a new business model which these other Apple wannabe mobile firms want to copy now. While the simple mobile phone continues to take a hit from recession, the smartphone market is expected to jump from 139 million last year to 295 million in 2010, per Gartner. This will exceed the 300 million-unit PC market in due course. If not for netbooks, PC market is set to be outpaced by mobile phones in few years.
RIM is not a newbie to mobile app market. It has seen download of its application kit 100,000 times and there are BlackBerry apps for QuickBooks and clinical apps. However BlackBerry does not have a consolidated site strategy where the applications are hosted and distributed leading to Apple being a first in the most intuitive delivery strategy.
Well, Apple is way ahead for now. It remains to be seen if others can catch up in Mobile apps or Mobile Web world. Nokia, RIM and others sell far more phones than Apple but iPhone growth continues to defy gravity giving a shiver to the other entrenched mobile players. Who imagined that a formidable and innovative firm like Nokia would have to worry about a new-to-town cellphone maker ?
Apple App Store has 25,000 apps which span the spectrum of uses. Santoshi Nakajima, president of photo editing startup Big Canvas claims that they don’t even bother with non-iPhone App stores. iPhone is that strong in hearts and minds of developers. Many developers say that Apple’s real edge is in providing the tools to help them build cool, innovative programs. Mark Woolen, an Oracle VP claims that they make apps for both BlackBerry and iPhone but iPhone offers a more elegant approach to app development over mobile phones.
The good thing is that this competition is great. It is bound to fuel innovation among mobile phone developers. Microsoft strategy is to offer Windows mobile phones which work seamlessly with its Windows OS (yawn!@), Nokia Ovi Store, scheduled to open in May, is adopting a creative approach – it will offer content based on user’s tastes, location and friend’s recommendations. Nokia is trying to offer personalization in app search and delivery. Interesting.
It is all good. We look forward to these app store wars. May the best win and may innovation thrive…
Now some predictions from CellStrat for next 1-2 years :
– iPhone will maintain the market leadership in mobile web and mobile app store. Others will struggle to come close to iPhone App Store penetration. – RIM BlackBerry will provide significant competition in corporate world to iPhone. We feel BlackBerry is behind in consumer segment in spite of being a top smartphone maker. They need to bring out some more compelling consumer devices. – Nokia and RIM will be the strongest after Apple iPhone and pose the maximum threat to iPhone App store. Nokia may come out a good second ahead of BlackBerry due to its massive global footprint. We believe Nokia will have 10-20% of overall app market and BlackBerry might in the 10% range on strength of its corporate connections. – Microsoft, Palm and all others will be third in Mobile App Store strategy. We still have to see what effect Palm Pre has on marketplace but its app store may continue to lag regardless of Pre adoption (due to developer apathy). All these other mobile App Stores combined might be limited to less than 20% of overall Mobile App Store market share.
Strategy for success for Mobile App Stores :
– Developers, Developers, Developers – Focus on developers and making their lives simple by providing tool systems easy to use and deliver. Develop vibrant developer community around the App Store and its tools. – Focus on devices – Get in the bed with the best devices – your own or third party. – Focus on usability – how to make the user experience with the apps simple and intuitive. Hire some usability experts (Sorry, Steve Jobs is not available).
We believe with these ideas, non-iPhone App Stores can cause some dent in iPhone App market.
Attended the Wireless Technology Forum (Atlanta) General Meeting on Wireless Consumer Apps
I visited the Wireless Technology Forum‘s General Meeting today. WTF is the top wireless networking group in Atlanta with 550 members and growing rapidly. The topic for today’s session was “Where is the Money in Wireless Consumer Applications?”
The WTF session today had an excellent panel :
Ken Hayes, EVP – Carrier Relations, ThumbPlay Rob Hyatt, Executive Director, AT&T Mobility Andy McGuire, VP Mobile Innovation, GSM Association Andrew Dod, VP Marketing, Whoop Mobile Ron Kozoman, Director, Mobile Operations, Turner Broadcasting SystemsModerator : Maury Margol, Sr. Director, Client Relations, Nielsen Telecom Practice
Here are some highlights from the panel discussion :
As one would expect, iPhone has come to dominate all things mobile internet in current times. Basic theme all throughout the discussion was that the iPhone is a game changer in mobile app world. It has shown the world how the mobile user experience should be and how to influence consumer adoption with a compelling application portfolio.
Which mobile apps are making money today ? Ken suggested it is the iPhone apps with its AppStore strategy. 3 years from now, it will be LBS which will be main revenue generator in mobile apps. Andy McGuire suggested that 800 million iPhone application downloads so far is the tip of the iceberg. It is an indicator that developers and consumers are there if the ecosystem is right. He mentioned that in future, one might see utility models like medical and home apps on mobile phones. One panelist opined that in spite of all the iPhone AppStore hoopla and massive no of apps available, money is still being made in limited categories like games and music.
On the question of wired devices, the panel was of the opinion that in future there will be lot of wireless devices which will preclude the need to have a wired network but higher speed apps will still find a use for wired networking eg in case of high speed TV. Andy quoted Sony CEO’s statement that in the future, 90% of devices may be wirelessly-enabled. Clearly wireless is the future for all networks but for reasons of speed and niche uses, wired devices and network will still prevail in some areas. Some interesting uses of wireless will be wireless blood pressure monitor, reservoir monitors etc.
On the question as to how a carrier like AT&T makes money in “open mobile” environments like iPhone AppStore, Rob from AT&T mentioned that iPhone has increased data plan sales for AT&T and also AT&T itself makes some of the iPhone apps. Plus AT&T attracts a huge no of new subscribers due to the iPhone exclusivity. In essence, AT&T has lots of monetization models around iPhone type of devices where the volume of customer adoption more than covers for the revenue lost due to “open” mobile gardens like iPhone AppStore.
Next there was a question – how can developers make money in mobile apps? The panel was of the opinion that there are lot of apps being made and put out most of the times for free. Lot of these apps are simply experimental in nature or are hobby apps with no business model around them. The panel suggested that developers need to think through the business model when writing apps. Most apps peak and then are forgotten in the ever increasing mass of mobile apps on iPhone AppStore. As to mobile ads inside the mobile apps, it is a nascent idea at this point but in future, this will become a bigger source of revenue vs a download fee. One panelist suggested that considering the fact that there are 4 times the no of mobiles in the world compared to no of PCs, there is a dearth of content for mobile so that is an area which developers can look at. Also RIM has stated that minimum pricing for BlackBerry App Store app will be $2.99 – this may invite more serious developers who have a revenue-generating business model in mind.
Per Robb Hyatt from AT&T, iPhone took AT&T Mobility from “2nd innings straight to 5th innings” in mobile data; I found this interesting.
When asked where does Google come into picture, the panelists mused that it is one of many players unlike in internet where it dominates via search. One interesting aspect about Google Android is that it has reduced manufacturing costs for OEMs (read cellphone makers) dramatically. Eg Samsung or Motorola no longer have to spend tons in maintaining custom mobile OS for its phones. It can focus on making compelling phones and just use Android for mobile OS.
On Mobile Payments, the panel thought that Near Field Communications or NFC payments are still in infancy although other countries are slightly ahead of USA in this area. Also consumers need to become comfortable about security before mass adoption of Mobile Banking will be seen. Andy gave an example of “Banking for the Unbanked” in Kenya on Safaricom network and its mobile payment offering called m-pesa. The 7 million m-pesa customers use mobile as a payment mechanism and receive paychecks on it. This is excellent innovation in mobile payment. Everybody agreed that mobile payments and banking is a trust model as much as it is a technology model.
Then the natural question : has recession effected mobile apps business ? Apparently not, per the panel. It seems consumers will not give up mobile and its little entertainment oriented apps just like they won’t give up on movies in a downtime. Mobile is an essential device today for a consumer.
All panelists agreed that there is lot of innovation remaining in mobile app arena. The primary gaps remain in user experience and business model evolution. iPhone experience is the beginning and not the end.
Well, very informative and highly intuitive discussion. Thanks to the panel and to the organizing team at the WTF – Maury Margol, Bob McIntyre and Steve Bachman.
Android Market announced…
Only concern about the Android Market will be licensing, security and stability of the apps…
Google’s Android developer community has announced Android Market, a service.
Cell Life 