App-enomics: The 3rd Wave of Application Development

Just a little over two years on the market, and the Apple iphone has captivated the hearts, minds and wallets of consumers ranging from yuppy moms with protective cases in colors to match their Porsche Cayenne, to techie developers who fall all over themselves for the iphones ingenious design and intuitive user experience, and just about everyone in between...except, perhaps those millions of loyal Blackberry users.

The smartphone phenomenon is in full effect and is showing no signs of slowing down. Indeed, traditional media, blogs and industry conferences are all humming with news of what is happening in the mobile space. The widespread adoption of smartphones is ushering a new era of communication and marketing potential. My opinion, and the focus of this post is that yes, we are on the verge of a mobile revolution. My argument is that is revolution is really the 3rd Wave of Application Development for smartphones and it will be characterized by brands and content providers linking their messages with applications that provide utility for consumers. Applications that serve a purpose, such as looking up the weather, comparing prices on products by scanning the barcode, or a widely supported location-based coupon application will be the big winners in the hearts and minds of smartphone users. Brands that are able to use mobile to help solve a problem or bring relevant content to users will earn mindshare with smartphone users. By taking a more contextualized approach to mobile marketing, and only attaching their message when it is relevant to a consumers need for information, will allow brands to overcome some of the current pitfalls associated application development. These particular dangers would include the cost of developing for multiple device platforms and the stickiness of apps. Only 10% of the applications have any significant success in the App store market and the average app has a relatively short lifespan. According to Greystripe,
the average iphone application is opened less than 20 times before being deleted. Many do not even get that far considering there are some apps that are thoroughly entrenched and get a significant amount of use.

But before we look to the future, we can take a look back at how it this mobile application craze got started.

Ushering in a New Economy, One Fart at a Time

The Iphone and App Store was a ground breaking, and apparently wind-breaking success with consumers. The first wave of application innovation can be characterized by the unlikely, but overwhelming success of the iFart application. Created by a single developer and somewhat beautiful in its novelty and kitsch factor, the iFart application remains amongst the Top 20 most popular applications downloaded for the iphone along with ibeer, ihunt and ishoot! See the list at Engadget.com


















About iFart: (Source: Tech Blorge)

iFart Mobile creator Joel Comm has stepped forward to be extremely transparent about the number of downloads he receives and where his products are ranked. The day it reached number one, iFart was downloaded a whopping 13,274 times.

The application costs just 99 cents to download from iTunes and Apple keeps 30 percent of the sales. Even after Apple’s seemingly enormous cut the application brought in just over $9,198 in just one day.

This information counters the notion that it’s nearly impossible for a lone developer to make a decent living through the App Store. The earning potential of iPhone application developers is also likely to grow as more people purchase the device.

The iFart application is representative of many of the early applications that populated the app store. Many were simple games, puzzles and visual demonstrations tied into the rich features, such as the accelerometer, native to the iphone and designed by developers in their spare time. Some are entertaining. Some are funny, but many are worthless and most of the early wave of the paid apps populating the Apple app store shared significant commonality; very few were designed with the intention of making any substantial amount of revenue for the developers.

Developers jumped all over the Iphone SDK to develop applications for the device; and program they did. Since it opened, Apple has released over 60,000 applications through its App Store storefront. With Apple earning 30% from every paid app downloaded through the store, Apple created a new-found business model, and in turn, a new App economy. On January 16, 2009, Apple announced on its website that 500 million applications had been downloaded.^[11] The billionth application was downloaded from the App Store on April 23, 2009.^{[Source: Wikipedia]}

Milestones

Date	Available apps	Downloads to date
July 11, 2008[13]	500	0
July 14, 2008[10]	800	10,000,000
September 9, 2008[14]	3,000	100,000,000
October 22, 2008[15]	7,500	200,000,000
December 5, 2008[citation needed]	10,000	300,000,000
January 16, 2009[11]	15,000	500,000,000
March 17, 2009[citation needed]	25,000	800,000,000
April 23, 2009[12]	35,000	1,000,000,000
June 8, 2009[16]	50,000	1,000,000,000+
July 11, 2009[citation needed]	55,000	1,000,000,000+
July 14, 2009[2]	65,000	1,500,000,000

What shocked everyone is how many people did download the early applications, and the fact that a Top 5 paid app could net substantial revenues for developers. It was these innovative early applications that showcased the unparalleled slickness of the user experience on the iphone, and and an ever growing population of app addicted users is what got the attention of many of the web 2.0 companies and brands that spurred the 2nd Wave of Application Development.

Social Media Rushes In - The 2nd Wave of Application Development

Many of the free applications populating the early app store were mobile portals for other Social Media or Web 2.0 technologies such as Facebook, Myspace, Shazam and Urban Spoon. These apps were designed to extend the reach of these various media and drive adoption amongst smartphone users.

And did they ever. To date, Facebook has been the big winner in the mobile social media space. The recent stats are astounding in how social media, in particular Facebook, is driving growth in mobile usage. According to the Fb website:

• There are more than 65 million active users currently accessing Facebook through their mobile devices.
• People that use Facebook on their mobile devices are almost 50% more active on Facebook than non-mobile users.
• There are more than 180 mobile operators in 60 countries working to deploy and promote Facebook mobile products.

Suddenly, the explosion in the breadth of the iphone app userbase and the stickiness of social media applications caught the attention of marketers across the globe. Talk about sticky...check out these survey results on how attached US Smartphone users are to their devices and apps. Applications that could live up to quality standards behind an brand, be it a web 2.0 brand like Google Earth, Wikipedia, Facebook or Twitter, or established brands such as Pizza Hut, The New York Times and Proctor and Gamble - through their SitorSquat application are leading the charge into in the ever evolving App-Economy.

In an article from MobileMarketer.com, Paul Gunning CEO of Tribal DDB of New York describes the how brands are approaching applications for mobile marketing and advertising.

“When you look at mobile, it goes beyond an advertising platform—brands are trying to use it to solve real business problems,” Mr. Gunning said. “It may be ad-driven in beginning, but actually mobile is valuable as an interface with consumers due to its ability to affect their retail behavior at the point of sale is really powerful.

“After they go in the store they send an SMS or go on the mobile Web for product information and a brand delivers back a video or customer reviews of that product,” he said. “Mobile goes far beyond simple ads, which is why it’s one of the most exciting platforms out there.

“It won’t be selling just selling eyeballs and impressions, there are real problems that mobile can solve.”

The trend of ingraining marketing and advertising messages while providing consumers a utility has spurred the 3rd Wave of Application Development and we are beginning to see some early examples. As brands and content creators invest in mobile interactions and the ecosystem become more robust, it is going to have have a significant impact on not only who pays for mobile content, but also the quality of the user experience.

I think the Urbanspoon application is an early leader in the space. The fact that the iphone restaurant search application is now adding reservation features to their offering that has competitor opentable.com shaking in their boots. Give people a fun and easy to use an application that helps them find local resto's, throw in the ability to complete the transaction by reserving a table and PRESTO! You have a killer app. Who wins? The consumer because its so easy to find good spots near you. Urbanspoon wins because they have a juicy revenue model of $1 per reservation made in their network of 10's of thousands of restaurants. Lastly, those same restaurants win because they get their name and profile directly in the hands of their local customers who may not normally walk through their front door.

Another great utility app is Fanadango. This service allows users to search and buy movie tickets through their mobile phone- either iphone app or mobile site. Unfortunately, it is not yet available in Canada (grrrr. typical) but this exerpt from a Mobile Marketer post details how Fandango mobile is changing the way people buy their movie tickets.

Fandango masters mobile
Fandango is the nation’s leading movie ticketing source and one of the top five mobile commerce sites in the Unites States, according to Nielsen.

The company first launched its WAP site in October 2005. It also made its services available on carrier decks for Verizon, AT&T and Sprint.

In March the company launched its iPhone application, which has been downloaded 2.5 million times since then.

“Our iPhone application has consistently shown up as one of the top free entertainment apps in Apple’s App Store,” said Ted Hong, chief marketing officer at Fandango. “Mobile has fundamentally changed Fandango’s value proposition.

“Tickets sold on mobile are on average 1.5 to 2 hours closer to the showtime than tickets purchased on the Web,” he said. “User behavior is different – mobile users browse more and more often and this creates new advertising opportunities."

The last example is a true brand supported app that has filled a demand from consumers. The SitorSquat App allows users to find, search or tag public restrooms. For those moments that just can't wait, users can search the database of restroom facilities to find the nearest and cleanest one. Users can also search for handicap facilities and baby changing stations. All brought to you by PnG brand, Charmin bath tissues.

"SitOrSquat is the perfect partner for us," said Dewayne Guy, external relations manager at P&G, Cincinnati, OH. "We're not going to reinvent the wheel by creating this application. We found somebody out there whose mission matches ours. It creates the perfect partnership. The trick is finding utility in a brand beyond what the product does, and SitOrSquat is a great example of that,” he said. “When you get traction, suddenly the scalability takes off and spreads virally." Source: Mobilemarketer.com

That's it for now. I will continue to draw attention to examples of the 3rd Wave of Application Development that are contributing to the mobile revolution. If you have any examples of apps that are pushing the limits of utility and marketability please share!

We are still in the early stages of the sea-change and challenges remain for application developers and content providers in terms of the cost of developing native applications for operating systems on all of the devices on the market. Even Google has said that it has not found evidence of ROI for developing applications beyond the core devices - iphone, Android and Blackberry.

Source: Engadget as of April 2009

All-Time Top Free Apps

1. Facebook
2. Google Earth
3. Pandora Radio
4. Tap Tap Revenge
5. Shazam
6. Pac-Man Lite
7. Backgrounds
8. Touch Hockey FS5
9. Labyrinth Lite Edition
10. Flashlight
11. Urbanspoon
12. Movies
13. iBowl
14. Lightsaber Unleashed
15. Sol Free Solitaire
16. MySpace Mobile
17. Virtual Zippo Lighter
18. The Weather Channel
19. BubbleWrap
20. Remote

All-Time Top Paid Apps

1. Crash Bandicoot Nitro Kart 3D
2. Koi Pond
3. Enigmo
4. Bejeweled 2
5. iBeer
6. Moto Chaser
7. PocketGuitar
8. Flick Fishing
9. Tetris
10. Texas Hold'em
11. Super Monkey Ball
12. Pocket God
13. Cro-Mag Rally
14. Ocarina
15. Fieldrunners
16. iFart Mobile
17. Touchgrind
18. iHunt
19. iShoot
20. Monopoly Here & Now Edition