Monday 2 March 2009

The endless world of Mobile Apps is getting bigger

Mobile industry experts have warned the sudden rush of mobile application stores could cause confusion for publishers and advertisers.

Last week Microsoft, Nokia and Orange all announced the launch of app stores, joining the likes of Apple, O2, Samsung and Google Android as the industry bids to drive use of content services.

The move to mobile apps aims to offer consumers a richer experience than can be achieved via a mobile internet site. However, there's a risk that stores with different development requirements, marketing strategies and distribution methods will lead to market confusion.

At a recent CES session, Nick Montes, president of Viva! Vision, noted that people want three things from their cell phones. "They want to communicate, and they want to save time and kill time," he said.

It's probably not a coincidence that nearly every mobile application available can neatly fit into one of those categories. Whether consumers want to communicate with their friends via Facebook Mobile, save time by checking traffic with TeleNav or kill time with an iBeer, these and many other applications are available through a growing list of mobile application vendors. The question developers are undoubtedly asking is: Are they making as much money as they should be?

The world of mobile application stores is an increasingly fragmented one. Apple offers the App Store. Google has the Android Market. Nokia unveiled the Ovi Store. Microsoft will offer the Windows Marketplace. Palm's Pre store is in the works, and BlackBerry maker Research In Motion (RIM) is building its inventory.

The fact that Handango advertises support for 1,000 devices and eight different platforms should suggest the complexity of the mobile applications market. The proliferation of new platforms and devices certainly doesn't make anyone's job easier.

"It's so inefficient," says Roger Entner, head of Telecom Research for The Nielsen Company. "I mean, there's a reason why retail has a lot of department stores and very few manufacturer stores. Ultimately, you hope device manufacturers and carriers will realize the value in having a more centralized application store."

For developers, the world of mobile apps can be feast or famine, with luck playing a big part in any success. Marketing an application as a single title in libraries that range from Apple's 15,000 titles to Handango's 140,000 can seem like an exercise in futility. Presently, developers are basically left to fend for themselves when it comes to getting the word out about their products.

Although rags to riches success stories are coming out of the App Store (iFart has reportedly sold 350,000 copies), Barnard recently reported that App Cubby only broke even, with $65,000 in revenue and $65,000 in expenses. Still, he's excited about being a part of the App Store and thinks that an open discourse about the store's strengths and flaws can mean better apps as well as better devices. "Besides," adds Barnard, "I never got into this to become a millionaire. What I'm really excited about is that the App Store has allowed me to run an international, sustainable business out of my home. Not to mention, I love doing it."

According to a new study, some smartphone owners spent as much on applications for their cell phones last year as they did on the devices themselves.

Call it the Apple App Store effect, says the ABI Research study on mobile storefronts. Despite having one of the smallest catalogs of all the development platforms -- now around 15,000 app titles compared to 85,000 each for Palm and RIM -- Apple's iPhone App Store has generated significant sales across the board.

As a result, this year more mobile application storefronts will be launched from Nokia, Palm, RIM and Samsung, said Orr.

The study, conducted in November, asked 235 U.S. smartphone users who installed applications on their devices in 2008 how much they had spent in the last 12 months. ABI found that almost 17 percent doled out between US$100 and $499 for mobile apps. The majority spent between zero cents and $100.

Considering how cheap most mobile apps are, starting for as little as a buck at Apple's App Store, that translates into a lot of downloads. There has also been a lot of excitement about mobile apps thanks to Apple heavily marketing its App Store for the iPhone and iPod Touch.

Of course, notes Orr, the downside is that Apple has created the expectation that all mobile apps should be as cheap as the ones it offers. On Dec. 31, 96 percent of the 12,000-plus titles in the App Store cost less than $10. That's cheap compared to the rest of the industry, which charges between $7 and $25 a pop.

Not everything in the App Store is truly a bargain, though. While some simple utilities go for less than $1, there are a number of professional apps that go for far more, like a stage lighting app called iRa Pro which costs $900.

ABI projects mobile app sales to rise from "hundreds of millions of dollars" this year to over a billion dollars in 2010.

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