Whether your platform has 350,000 apps or 5,000, the industry is still mulling the best way to connect users with apps.
When is enough, enough? In the world of apps, where the Apple App Store and Android Market boast enormous app catalogs (350,000 and 200,000, respectively), one wonders whether there’s any end to the posturing over inventories. However, as new players enter the market and consumers begin getting their apps from different sources, what emerges is a complex ecosystem that is still honing its business model.
When one considers Apple or Android’s catalogs or download numbers, it may sound ludicrous to say that the booming apps market is still finding its footing. The success of Apple’s App Store has left few questioning that model, but is a closed system like iOS really the only road forward?
MICROSOFT FOLLOWS APPLE
Al Hilwa, analyst for IDC, says that each platform has its own philosophy when it comes to delivering its user experience and that includes varying strategies when it comes to content.
“You’ve got this situation, where the different platforms are of different minds about what is the best experience for the user, what is the best way to win carriers, what is the best way to win developers?” Those different philosophies translate to different attitudes about which apps should pass inspection.
“I think people have a hard time second guessing Apple’s approach, because they’ve been so successful,” Hilwa says, adding that while the closely managed experience at the App Store has led to an excellent user experience for iOS users, there’s “definitely a drift towards more openness.”
Hilwa recently published a report that praises Microsoft for having reached 5,000 apps at the Windows Marketplace, saying that the company is on the right track to redeem itself in the smartphone market. He writes that while numbers alone do not reflect the whole story, IDC believes that the WP7 developer ecosystem is one of the platform’s key assets and that Microsoft is well-positioned to achieve the third largest app portfolio in the smartphone business sometime in 2011.
But when do those numbers become meaningless? An extensive catalog of apps is important for any platform, Hilwa says, but adds that once a store breaks the 50,000 mark, other things become more important.
“I think we’ve hit that point with Apple and Android, where apps are no longer a barrier to adoption. We’ve hit the point where other things start to matter, like speed of performance, usability… or just the sheer attraction of the brand, as is the case with Apple.”
THE OPEN MODEL
If there’s a drift toward openness in the app space, then GetJar is the poster child. GetJar sees the market very differently than the rest of the bunch. Ilja Laurs, GetJar’s CEO, sees an apps market in its infancy, with the potential to grow into more than just independent pieces of software that reside on the smartphone.
“We don’t really see apps as purely native code outlets… We really adopt a consumer view of apps, which is that apps really are icons that are used to launch services,” Laurs says, noting that touchscreen devices have pretty much made the process of typing Web addresses on a mobile device obsolete.
Twenty percent of GetJar’s apps are mere portals to mobile sites that are dropped into a visual icon. The totally free GetJar makes its money entirely on marketing, which means that anyone can post anything on GetJar for nothing.
Laurs says that GetJar’s promise is to offer their customers an app space that is as open as the Web, a dramatic contrast to Apple and Microsoft. “We sell marketing only to those who need it,” he says. “If developers want to buy premium listings on our site, we are happy to sell it on an auction basis. That revenue is sufficient to run the whole operation, to provide platform service to developers for free, to waive any bandwidth that they consume. It allows us to remove ourselves from all transactions.”
It’s a unique concept for the apps market, where Android and Apple have been about as hands-on with their stores as a company could get. “Everyone’s trying to control this space. But you know, it’s not like anyone has to approve your new website. It’s not like anyone is going to tell you whether you can use Flash on your website. Nobody tells you that you have to specifically use iTunes for billing,” Laurs says.
GetJar is proof that not everyone wants or needs to pay the 30 percent developer tax that has become the standard fee for most app stores, he says. The equivalent on the Web would be Google charging Amazon to exist in its search results and then charging 30 percent off everything it sells. “Again, this sounds like complete nonsense on the Web but this is exactly how things are evolving in mobile.”
Laurs breaks the typical app store into three offerings: platform, marketing and billing. But he argues that larger, established entities like Amazon or Facebook either don’t need billing or don’t need marketing.
“For a small developer… he would love to pay 30 percent for marketing because he has no alternatives, but for someone like CNN, they don’t need marketing.” And a company like Amazon, Laurs contends, has ample billing capabilities. Laurs says a service like Fandango, which sells movie tickets, can’t exist on the 30-percent model. “They cannot run their business on BlackBerry App Store, because BlackBerry charges them 30 percent on their existence and their margin is 20 percent on the sale of physical goods.”
CARRIERS STILL SEARCHING FOR ROLE
There’s no doubting that carriers are in love with apps. Those little icons mean data usage and subsequently dollar signs for the operators. In most cases, the heavy lifting has been done by the OEMs and platform developers, as is the case with iOS and Android, but the carriers still want to be in the mix.
According to The Pew Research Center’s Internet & American Life Project and The Nielsen Company, one in three adults have cell phones that use apps. The study also found that 68 percent of those with phones that support apps – about a quarter of all adults – actively use them. The carriers think they can help push those numbers higher.
Last fall, Sprint rolled out its Sprint ID service, which offers collections of apps by category (e.g. Business User, Music Lover, etc.) and then delivers them as a bundle to the user’s phone. It’s one attempt at facilitating the adoption of apps.
At last year’s Mobile World Congress, global operators and some device manufacturers announced the formation of the Wholesale Applications Consortium (WAC) with the goal of offering a simpler route to market for developers to distribute their apps. More details on its progress are expected early this year.
But IDC’s Hilwa says the carriers are at the losing end of the battle. “Center of gravity has shifted away from carriers to the OEMs and the platform developers,” he says, adding that while carriers are still investing a lot of money in content delivery methods, it’s unclear as to whether it’s profitable.
Laurs thinks it’s about time the carriers leave the apps game to those that know it best. “You don’t ask Ford car manufacturers to be producing Hollywood films. They’re just different industries,” he says. “Carriers by definition are engineers, they’re wireless guys… You cannot turn AT&T into Warner Brothers over night.”
For now, a little education might go a long way to help the entire ecosystem. For example, the Pew study found that a lot of users don’t even know whether they’re using an app and many are not sure whether preloaded software is actually an app.
As the old saying goes, you can lead a horse to water, but you better make sure it knows what water is if you expect it to drink.