Gaming takes the cake in terms of Apps and its stickiness with users.Average mobile gamer plays approx 7.8 hours per month where-as an iPhone user plays the most at 14.7 hours per month & Android users play 9.3 hours p.m. This data was released by Nielsen for Q2,2011.
An interesting survey of top 100 grossing games on the Apple Apps store in January and June of 2011 by Flurry yields an interesting trend in terms of gaming. Games occupy more than 75% of all top 100 grossing apps in the app store, it’s the single most dominating business model in the mobile apps industry today. The interesting result of this survey is the growth of revenue from Freemium games at the cost of share decline of Premium-paid up games.
Stickiness is the key to success of all gaming because this then provides compelling spending opportunities and branding spaces for consumers as well as sponsors. The best example is that of Zynga which with its Farmville and Cityville franchises has worked its way to a $1bn IPO.
A freemium model with in-app purchases, is perceived to be advantageous as it can induce higher trial and usage rates. Also, when a network of friends opts in to play together, their group profiles and consumption can be an interesting hunting ground for brand ads and sponsors. Those who consider buying or paying money on the gaming app will anyways be doing it if the game appeals to them. Thus in terms of appealing to larger initial masses, a freemium app definitely beats out a premium app. The other problem with a premium app is that without any trials on the game, it is a difficult choice to invest on the game upfront to the users.
Freemium and Free-to-play is here for good.
What this could mean for Apple and Google!
Watch out Apple! Apple’s revenues through its app store comes from the paid apps downloads on which it gets a 30% cut, and from the iAd service through which it earns ad revenues on free apps and gets 40% cut. However, Amazon’s entry into this market could be a threat to Apple, which already is facing competitive pressures from the growing popularity of Android’s app store. The Apps market would continue to see some fierce growth going thru the next half decade. However, traditional e-retailers such as Amazon would bring a serious (negative) price sensitivity, which would reduce the Margin thru-put for Applications.
Even if you’re Google and Amazon’s store eats into its own App Store revenue, the existence of a great App store brings more people to Android, regardless of which store they use. While an Amazon App store represents a bold business move for Amazon, positioning them to leverage a platform that will pervade phones, tablets, televisions, cars, and a variety of other “connected devices” in the next few years, it also represents credibility and a serious investment in Android by one of the strongest brands on the Internet.
The first “desi” Application store, Airtel’s App Central is live. Consistent with Apps Stores world over, App Central is an open platform for developers to create apps for any and all handsets and operating systems. While there is the Apple iTunes, Nokia’s Ovi Store and Blackberry’s App world, Airtel’s Apps Central is unique in its being platform independent irrespective of handset or OS. The App Central is a cross platform offering that will even work on ultra budget handsets that run on the JAVA OS.
There are still quite a few websites third party websites that allow content download for all mobile operating systems but the App Central is far more convenient. The system is designed to recognize the operating system and showcase apps that are appropriate for the same. For a start, the App Central features 1250 applications across 25 categories available for download on more than 550 compatible devices.Applications are available for as low as Rs. 5 and go upwards of Rs. 25. Airtel expects vernacular content to contribute 20-25% of the downloads and vernacular content would be one of its biggest differentiators against the iTune, Ovi and others.
App Central also stores all the applications a user has downloaded in a section called “My Purchases”. This makes it very convenient to change handsets. The user would simply go to the My Purchase section at the bottom of the page and download and install apps. This reduces the time of having to look for them all over again. If apps have been previously paid, there’s no additional charge for downloading it again. Airtel is also working on a downloadable version of App Central to do away with the need to access it through a web browser.
Mobile application creators have been invited by the Airtel to submit their applications at this developer platform and CellMania will be powering the entire back end – right from the applications submitted by the developers to the AppCentral storefront.Developers registering with CellMania’s platform can expect to receive 28 percent of revenue share of the total sales of the application.
Bottomline: Even though Airtel App Central may not be at par with some of the OEM’s stores just yet, it will be, given time. It will also be interesting to see how vernacular mobile content performs. An interesting move by Airtel and we shall be watching the progress of the App central through the days and months to come.
The numbers are out. In an earlier post , I had discussed Apps stores and the race to Mobile Apps, I had mentioned that the Apple Apps store constitutes 71% of the total Mobile Apps available globally. Such was the dominance of the Apple Apps store, that Apple is 2.5 times the number of Applications in all other Apps stores combined together. A latest report from market research firm Gartner suggests that mobile apps are big business, and that business should only grow in the next few years. According to Gartner’s numbers, Apple completely owns this market, grabbing almost every one of the 4.2 billion dollars spent on mobile apps in 2009. Apple owns 99.4% of all mobile apps sold through 2009. Based on Gartner’s estimates and our own analysis, Apple could hold on to at least two-thirds of the market if current sales trends hold for 2010.
Apple first opened the App Store in July 2008, along with the launch of the iPhone 3G and the release of iPhone OS 2.0. Sales were brisk, with 300 million apps sold by December. After the holidays, that number had jumped to 500 million. Earlier this month, Apple announced that sales had topped 3 billion; that means iPhone users downloaded 2.5 billion apps in 2009 alone. Gartner’s figures show another 16 million apps that could come from other platform’s recently opened app stores, giving Apple at least 99.4 percent of all mobile apps sold for the year.
Going forward, Gartner expects Games to remain the number one application, and mobile shopping, social networking, utilities and productivity tools continue to grow and attract increasing amounts of money.
Gartner’s predictions for 2010 are 4.5 billion apps sold, for a total of $6.8 billion in revenue. If Apple can merely maintain its current rate of about a quarter billion app sales per month, it stands to be responsible for 3 billion apps sales—67 percent—good for $4.5 billion in revenue. Apple’s cut would be $1.35 billion, with developers taking the remainder. However, as Apple gains more users from sales of new iPhone models and possibly from an expected tablet, Apple could get an even larger share of the mobile app market. This then is a key profitability driver for Apple, the fulfillment of a prophecy made with regard to profitabilities and Apps stores.
Predictions for 2013, just a few years away, are even bigger—21.6 billion apps sold for a total of $29.5 billion revenue. The firm predicts that by then, 25 percent of the revenue generated by mobile apps will be from free versions supported with advertising. Growth in smartphone sales will not necessarily mean that consumers will spend more money, but it will widen the addressable market for an offering that will be advertising-funded. That makes Apple’s acquisition of a mobile advertising firm seem like an even smarter move, just for the extra revenue alone.
The App Store model has become de rigueur on all the smartphone platforms, with RIM, Microsoft, Palm, and Google each building a similar way for developers to make apps available, and for users to find them and pay for them. Gartner warns that developers will have to carefully consider which platform’s app store is best to promote their app. Even with the hundreds of thousands of options that vie for users in the iPhone App Store, the numbers suggest that Apple remains most developers’ best bet.
Two years ago, the iPhone blew away expectations for what mobile devices are capable of. Apple has the opportunity to do in mobile smartphones what Microsoft did on the desktop: Own the standard platform upon which every popular application is based. The irony of this cannot be lost on Microsoft, which has flubbed its own opportunity to do the same.And mobile devices and applications are the future of the computing industry
As the App Store has matured, so has the need to come up with more sophisticated ways to profit from it. Simply having a great application is not enough. The App Store’s success — as much a surprise to Apple as it has been to competitors — has given rise to a new digital ecosystem. Today, hundreds of software aspirants, from individuals tinkering in their bedrooms late at night to established companies looking for lucrative new revenue streams, are jumping into the App Store fray.And smart-phone manufacturers across the board are trying to make their platforms more attractive and lucrative to bring in the kind of creativity and enthusiasm that Apple has.
However the question increasingly being asked by analysts world-over is “Is it about 20,000 apps or 200,000 apps or is it about changing those 20,000 apps and their deep integration and how they interrelate to one another?” With Apple adding the numbers up briskly, the view about Apps is now beginning to shift. Palm and Research in Motion, say they don’t need an avalanche of applications to compete.
It is much more interesting to change the applications and changing the user experience and really unlocking the promise and the money and revenue opportunity for the ecosystem. Thus the story is changing from too many apps to a limited number of meaningful apps: Apps which integrate into the user’s activities and lives and are used as a necessity.
Most phones will end up being smart-phones. There will be more services and new ways to monetize and more consumption. Growth is a given; it’s just a question of who is going to innovate in the right way to drive that value proposition to capture that growth.
Microsoft, which analysts have criticized for its sluggish approach to the smartphone market, also says it is emphasizing quality for the application store it introduced in October, Windows Marketplace for Mobile.“Our strategy is to look holistically at how we can provide the best all-around user experience,” says Victoria Grady, director of mobile strategy at Microsoft. The Marketplace now has more than 800 apps.
Many developers and analysts think Google’s mobile operating system, most recently placed in the Motorola Droid, may evolve into the fiercest competitor to the iPhone.
Android unique applications are no longer limited to a single device. The growing number of Android-powered phones available on multiple wireless carriers increases the financial opportunity for developers. An year back, Android just had 1 handset which has now increase to close to dozen. Android volumes are going up at a tremendous pace, and the developer ecosystem is seeing that.
Unlike Apple, Google has eschewed a review process, allowing any developer to publish an application to the Android Marketplace, its version of the App Store, instantly. About 14,000 applications are available for Android-powered smartphones.
Apple has another strong advantage: the iPhone offers developers a uniform, standard platform. When, a developer creates an application for the iPhone, he knows how it’s going to run exactly as you tested it on every single model. The same isn’t true for the rest of the smartphones, which have varying screen sizes, processor speeds and form factors.
HOWEVER the competitive landscape shapes up, the App Store phenomenon shows no signs of slowing. IDC, a technology research firm, predicts that the number of iPhone apps will triple next year, fueled by the growing popularity of smartphones and other mobile devices. Along the way, analysts say, the App Store will continue to upend the architecture of the smartphone business and threaten competitors that don’t have vibrant and extensive offerings.
This changes the way the smartphone industry operates. Each handset company would come up with its latest iterations and maybe have the hottest device of the season or not. With apps in the equation, all that changes. It goes from being a product cycle game to a platform game.
Did Apple anticipate the kind of response that Apps store has received when it conceived the store? (Dont think so!).Not only has it helped the device sales,it also has established a new paradigm for the smartphone industry. Here’s profiling the Apps store.
Apple changed the view of what you can do with that small phone in your back pocket. Applications make the smartphone trend a revolutionary trend — one we haven’t seen in consumer technology for many years. The advent of the App Store and the iPhone is often compared to AOL’s pioneering role in driving broad-based consumer adoption of the Internet in the 1990s. The game that Apple is playing is to become the Microsoft of the smartphone market.
Thanks in large part to the iPhone, introduced in 2007, and the App Store, which opened its doors last year, smartphones have become the Swiss Army knives of the digital age. They provide a staggering arsenal of functions and tools at the swipe of a finger: e-mail and text messaging, video and photography, maps and turn-by-turn navigation, media and books, music and games, mobile shopping, and even wireless keys that remotely unlock cars. The popularity of Apple’s app model has reached a fever pitch. Tens of thousands of independent developers are clamoring to write programs for it, and the App Store’s virtual shelves are stocked with more than 100,000 applications. Apple recently said that consumers had downloaded more than two billion applications from its store. Major players like Research in Motion, Palm, Google and Microsoft have taken note and scrambling to replicate the App Store frenzy. App fever has even prompted cities like New York and San Francisco to open reservoirs of city data to the public to spur software developers to create hyperlocal applications for computers and phones.
There’s never been anything like this experience for mobile software. This is the future of digital distribution for software, games, entertainment, all kinds of content. As the App Store evolves from a kitschy catalog of novelty applications into what analysts and aficionados describe as a platform that is rapidly transforming mobile computing and telephony, it is changing the goals and testing the patience of developers, bolstering sales of the Apple mother-ships the applications ride upon — the iPhone and iPod Touch — and causing Apple’s competitors to overhaul their product lines and business models. It even threatens to open chinks in Apple’s own corporate armor.
APPLE cloaks most of its inner workings in a shroud of secrecy — a tactic that has helped preserve the company’s mystique and generate intense interest in its product rollouts. But the App Store relies on vast cadres of outside developers to populate its virtual shelves with products, leaving Apple in the unfamiliar and at times uncomfortable position of having to collaborate with folks who haven’t drunk the company’s corporate Kool-Aid. This has led Apple to be deeply supportive of developers once shunned by big telecommunications companies, while also frustrating many of them more recently with what developers see as the company’s inscrutable and arbitrary process for accepting programs into the App Store.
Gone are the days when mobile developers had to negotiate with major telecommunications companies if they had any hopes of publishing their applications on a mobile phone. It took six to nine months to build a relationship with a carrier, maybe a quarter-million to get the infrastructure built, and the company took 50 percent or more from each dollar. Apple has helped create a much healthier middle class of developers and expanded the pie for everyone. Apple pockets 30 percent of the revenue earned by any App Store program, with developers keeping the balance. Apple receives more than 10,000 application submissions each week. Most become available in the App Store within two weeks (creating yet another problem: the difficulty consumers have in efficiently and effectively trolling through 100,000 apps to find hidden gems they hadn’t known about).
Although barriers to entry for software developers have dropped considerably, there are some concerns and discrepancies that developers voice.Developers now cite instances in which applications have been held in approval limbo, neither accepted nor rejected for months. And as bigger companies begin churning out programs, the smaller, garage-size outfits worry that they will be squeezed out. Developers review these processes as navigating opaque hurdles.
Some Apple developers are willing to go to greater lengths — underground — to avoid dealing with Apple’s policies and to get their software out quickly and on their own terms. To do that, they create programs for “jailbroken” iPhones and iPod Touches. Such devices are modified to allow anyone to upload a program onto them, which Apple says is illegal.
It’s unclear how concerned Apple is about some of the tensions swirling around the App Store. The company’s App Store policies have faced criticism — and even prompted a Federal Communications Commission investigation of Apple’s decision to reject an iPhone application developed by Google, which is still under way. Critics say they wonder whether the company can be trusted to maintain a fair marketplace, especially when developers release products that could compete with Apple’s current or future line of products.
Digital content has been available for years, but the right vehicle to consume the content has been lacking. Will Apple bridge this gap with the iTouch (iTablet in a first few posts)
In March, Reuters reported that Apple had ordered a substantial batch of 10 inch touch-screens from Taiwan to be delivered in Q3 of 2009. In April, the Wall Street Journal reported that Steve Jobs was actively involved in the development of the Tablet. In July, the China Times reported that Apple will debut their new product in October for $800 after agreeing to production deals with Foxconn, Wintek, and Dynapack. TheStreet.com is reporting that Apple will release a subsidized Tablet through Verizon. In the July earnings call, Apple management went out of their way to trash the netbook space but they refused to deny the coming Tablet, saying they will only release products that are ‘innovative and that they are proud of’. These are all reputable sources that seem to unveil the secrecy surrounding the pending product. Will the tablet have a substantial impact on Apple’s core business? This device is taking its place at the high end of the iPod family; it will be a larger version of the iPod Touch. This product won’t fall quietly into place however. The iTouch Tablet launch is primed to be the most significant in the history of Apple.
1) Apple Finally has an App Machine. Steve Jobs has mentioned that he has never seen anything like success of the App Store in his career. If he is saying that, then I’m saying that this 9.7 inch iTouch that has been designed to optimally utilize the apps will become the flagship Apple product. We are witnessing a transition in the way the Internet is used. Mobile content requires a tailor made user experience that is not efficiently delivered by the traditional website model. Although we have grown accustomed to navigating the Web by browsing websites on our PC, consumers are showing an affinity for the App Store model. Mobile Apps are designed for usability and the 1.5 billion downloads thus far from Apple’s App Store clearly demonstrate a user experience in high demand. The trend is in place that shows consumers will desire an app rather than visit a website. Perhaps we will one day see that apps are more popular than actual websites. The unspoken secret about the iPhone is that it wasn’t designed to become the ultimate App Store device. The screen is too small. The order of operations for the iPhone are phone first, iPod second, Apps third, and Internet browser fourth. This new iTouch is principally designed to take advantage of the App Store gaming, books, news, entertainment, social networking, etc…
2) Mobile High Speed Connectivity. Until now, a truly portable Internet device hasn’t been possible because of the scarce network availability. Verizon’s new Mi-Fi technology appears to be changing the landscape as it enables a Wi-Fi connection anytime and anywhere. It’s looking like this iTouch will mark the beginning of a relationship between Verizon and Apple. The anytime and anywhere connection will allow this product to serve as an up to the moment e-reader. By next year, we will all be wondering how the newspaper industry survived as long as it did with its outdated paper delivery model. The iTouch will replace newspapers, magazines, and books. Imagine a college student not having to lug around his $600 worth of textbooks each semester. Imagine not having to load up on magazines at the airport. The digitization of education and media has arrived. This is the first device that caters to digital readers on the go. Amazon’s Kindle was such a poor attempt that it’s not even worth analyzing. Same goes for the netbook fad.
3) Free Communication. Why do I think the iTouch will be more significant than the iPhone? Because the trend of communication technology is being routed away from wireless cellphone carriers and towards the Internet. Through the use of Skype you can make phone calls over an Internet connection and through the use of Apple’s iChat you can communicate by video for free. There are no overage charges, there are no hidden fees, you just pay for your Internet connection and communicate at will. The rumors are swirling that the next generation iTouch will include a camera and a microphone thereby making this capability a reality for Apple customers.
4) No Carrier Exclusivity. There is no doubt that iPhone sales have suffered because of the exclusivity agreement between Apple and its carriers. In the United States there are millions of Verizon and Sprint customers who would love to have the iPhone but don’t want to switch to AT&T . It appears that the iTouch will be openly available. All those people who wanted an iPhone but couldn’t make the carrier switch will flock to the iTouch Tablet. Apple will struggle to produce enough of these to meet the demand.
Being a member of the iPod family means that this new iTouch will be announced at the typical iPod refresh event during the first full week of September. The euphoria of Steve Jobs being back on stage introducing a revolutionary new product will cause the stock to surge ahead of the unveiling. Seeing adults stand in line while wearing their pajamas in the early morning hours to purchase the first iTouch Tablet will cause the stock to react again in October. The conclusion is simple. Apple owns the tech revolution. The rise of the dot-coms got out of control at the beginning of the decade for all the right reasons but the infrastructure wasn’t ready to justify the digital transition. Now that the infrastructure is ready, society will embrace the iTouch Tablet in a way that might even surprise the visionary himself
Apple’s Q3 results have been very good! The thought is that this is Apple’s brightest hour and having hit the peak, there is no way but a gradual slide down. However there is more in the communication from Apple on how they let their own products cannibalize themselves and how they are innovating the future! Apple COO stops short of naming iTablet as the next from Apple Stable
Apple has been heaped with praises for its non-conformist strategy and super-hit portfolio of products which have upstaged the industry incumbents. The Q3 results declared this week have been Apple’s moment in history! Third-quarter sales rose to $8.34 billion, up from $7.46 billion a year ago, due in part to strong sales of the iPhone. Net income rose to $1.23 billion, up from $1.07 billion. Apple’s growth of 4% with IDC forecasting negative 3 percent and Gartner forecasting a negative 5 percent, puts them 7-9 points ahead of the market.
- Response to the new iPhone 3GS has been tremendous with over 1 million sold by the third day after its June 19th launch. Apple goes on record saying that they are currently unable to make enough iPhone 3GSs to meet demand and are working to address that.
- Apple registered outstanding sales of 2.6 million Macs setting a new June quarter record and nearly meeting the all time quarterly record.
- Apple sold 10.2 million iPods which was down from 11 million in the year ago quarter. There were two key reasons for this decline: First, we reduced channel inventory by over 400,000. Second, sales declined by 4% year-over-year.
- The iTunes store delivered another great quarter fueled by strong sales of music, video and apps.
- Apple retail stores hosted 38.6 million visitors during the quarter compared to 31.7 million visitors in the year-ago quarter –an increase of 22%.
- Apple’s app store has more than 65,000 apps, compared with 1,000 to 2,000 at the Nokia store. Apple thus has a substantial lead on apps.
There were a few significant announcements during the earnings call, which warrant attention.
The first point
- The iPod growth story now appears to be tapping off. Shipments of iPods fell 7% from the first quarter to second. And iPod ASPs also declined, despite the growth of the more expensive iPod Touch.
- Revenues from selling Mac computers actually fell 8% last quarter compared to a year ago. The company sold 4% more Macs than it did in the same period last year, at a lower price point.
Macs and iPods are slowing down and may be entering the declining plateau stage of their life cycles! Apple would have seen this coming, and the $99 iPhone would be cannibalizing the iPods, by design.
Secondly, if you read between the lines of Timothy Cook’s message, it appears that Apple has a trick up its sleeve. Quoting Apple COO, Timothy Cook
“I think some of the netbooks that are being delivered, or many of them, are very slow. They have software technology that is old. They don’t have a robust computing experience. They lack horse power. They have small displays and cramped key boards.”
Is this what Apple is going to spring upon Netbook manufacturers?
The invective makes you think that while Apple rails against the existing Netbook makers, may be, it has a net-book product that it plans to launch soon! Is this the Apple heralding its iTablet.
How the cloud will transform mobile apps and why Big Apple may not be too happy about the developing scenario?
The Apple Apps store was the start of something big. While Apple has already registered 1 billion downloads, Palm notched up an impressive million in the first few weeks of launch. Google, RIM, Nokia are following suit. All this is happening in midst of reports that contrary to earlier beliefs, the Apps store is not really creating the kind of stickiness which the Internet marketers were counting upon.
Today the Apps store may not be generating a lot of cash/revenue. Infact, Apps Stores are thriving more on classic freetardonomics and base commoditization than ever. However, it is a space being infiltrated by handset-makers, software companies, and operations/ business support systems vendors, thousands of new and experienced developers, third parties and even carriers. It also is a space that will be and already is being transformed by the cloud, according to ABI Research.
In a report released this week, ABI said that new software running in the cloud will drastically change the way mobile apps are developed, acquired and used, breaking the market free from the constraints of limited computing power. According to the report, this new paradigm could deliver revenues of nearly $20 billion annually by the end of 2014.Web development can enable apps to run on servers instead of locally, so handset requirements for processing power and memory can be greatly reduced and developers will only need to create one version of their app. Certain apps and services, including Google Apps and Amazon.com, already use the cloud, but for the most part, while the industry is trending toward this, these are still the early days.
Many and most of these players, force developers to choose between picking their favorite OS or creating multiple versions of their app. Companies such as Qualcomm have launched open platforms for apps distribution to address this issue, but it still doesn’t solve the problem of taxing processing power and memory constraints. Though there are issues such as access, security, data back up, the main problem with a continuous connection with the cloud is that clouds based apps stop when the connection is lost. New programming languages such as HTML 5 can overcome this through data caching. So while cloud computing becomes more common, apps will become much more sophisticated. Business users will benefit from collaboration and data sharing apps; while personal users will gain from remote access apps, allowing them to monitor home security systems, PCs or DVRs, and from social networking mashups that let them share photos and video or incorporate their phone address books and calendars.
Interestingly, while Apple pioneered the Apps Store trend, it is also most likely to resist the cloud based model and be reluctant to move into a more democratic apps development market. It would be counterproductive for Apple to let the base for all the Apps driven advantage (iPod/iPhone based) to get diluted and hence, would not like to give up the control that Cloud Computing may ask to forsake on their Apps stores/developers. For the rest of the market, however especially wireless operators, for which the cloud can up transport revenues cloud computing should, and likely will, be embraced.