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Great Survey with top-part in this article: pages 43,44 ;-)

Great Survey with top-part in this article: pages 43,44 ;-)

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    GigaOm ApplicationdevelopersAlliance GigaOm ApplicationdevelopersAlliance Document Transcript

    • A demographic and business modelanalysis of today’s app developerBy Amy CravensThis research was underwritten by the Application Developers Alliance.
    • MOBILE Table of contents EXECUTIVE SUMMARY 4 INTRODUCTION 5 Methodology 6 DEMOGRAPHIC PROFILE OF APP DEVELOPERS 7 Personal characteristics of app developers 7 Employment profile of app developers 9 WORK ENVIRONMENT FOR APP DEVELOPERS 12 DEVICE PREFERENCES 16 PLATFORM PREFERENCES: CURRENT AND PLANNED 19 Android is gaining ground 19 Further concentration of the top four phone platforms 20 Growth in Windows 21 Growth in HTML5 22 LEADING APP CATEGORIES 23 AD USAGE 24 Performance metrics: ad impressions and revenue 25 PAID APPS 27 APP MONETIZATION AND CORRELATION TO OTHER STRATEGY FACTORS 31 Correlation between paid apps and other strategy factors 32 Strategy variances 33 Correlation between paid apps and other strategy factors 33 Profile variances 34 Strategy variances 34A demographic and business model September 2012 -2 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE EMERGING TV-APP MARKET 36 Ads in TV apps 39 Paid TV apps 40 DEMOGRAPHIC IMPACT ON APP-DEVELOPMENT STRATEGY 41 Size of firm 41 The small app-development firm 42 Case study: independent consultant (HT Applications) 43 The large app-development firm 44 Regional app-market variations 46 Asia-Pacific app-market variations 46 North America app-market variations 48 Western Europe app-market variations 49 Work status of app developers 51 Hobbyist developers 51 Case study: connecting developers with projects (Work for Pie) 53 Professional developers 54 Career developers 57 FORECAST 59 CONCLUSION 63 APPENDIX A: DEVELOPER SUPPORT 64 Case study: infrastructure (Twilio) 64 Case study: programming tools (Temboo) 65 Case study: search and discovery (Hook Mobile) 66 ABOUT AMY CRAVENS 68 ABOUT GIGAOM PRO 68 ABOUT THE APPLICATION DEVELOPERS ALLIANCE 68A demographic and business model September 2012 -3 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE !"#$%&#()%**+,- App developers are the cornerstone of the multibillion-dollar app market. They supply the creativity and the talent behind the creation of the millions of apps on the market today. However, because individual and small companies are the prominent players in the app-development field rather than large, multinational organizations, very little is known about this segment of the app market. App developers are concentrated in North America, Western Europe, and Asia-Pacific. Except for high school hobbyists, they are usually highly educated men in their mid- thirties with several years of app-development experience. Their primary focus is on developing tools and utility apps, with a secondary focus on gaming and social utilities. While paid apps are more prevalent than ad-based revenue models, many developers view apps as projects rather than products, so they are not highly motivated to monetize their applications. Composed mainly of individuals or very small companies, the developer community remains largely unknown and often underrepresented in the app market. Given these challenges, those organizations and companies that can bring tools, resources, and a collective voice to this group will be an important factor in the evolution of mobile-app development.A demographic and business model September 2012 -4 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE ./0,12%$&1/ In the five years since Apple launched the iPhone, the mobile-app market has experienced phenomenal growth: The App Store, launched in 2008, reached 25 billion downloads as of March 2012. Apple’s success inspired numerous other market entrants, creating a broad and diverse array of devices and platforms as well as distribution and payment methods. Although Android came to market two years after iOS, its devices and applications, based on Google’s operating system, have captured a large share of the market, surpassing 15 billion downloads as of the second quarter of 2012. Operating systems from other companies such as BlackBerry, Symbian, and Windows have added further complexity to the market. In 2010 Apple instigated significant growth in the app market with the launch of its iPad, which provided a new medium for app usage distinct from smartphones. Over the past two years the tablet market, like the smartphone market, has diversified, and device shipments have grown enormously. And despite being a nascent market, TV apps have the potential to usher in a third era of app usage. With the influx of players and the growth in the installed base of smartphones and tablets, the app market reached roughly $5 billion worldwide in 2011. The many parties participating in this revenue opportunity include operating system developers, device manufacturers, and mobile operators, but at the core of the market is the community of developers creating the apps. Although this community has expanded with the market and these developers are the foundation of the industry, little research has explored this group. This report explores the demographics of the app-developer community and how differences in demographics affect perspectives and app- development strategies.A demographic and business model September 2012 -5 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Methodology This report examines the results of a web-based survey fielded to app developers in the summer of 2012. GigaOM and the Application Developers Alliance sponsored the survey, and upon completion it had 352 respondents. Over half of the respondents were based in North America, a factor of both the sample that was drawn from the GigaOM and the Application Developers Alliance client base as well as the strength of the app market in North America compared to other regions. While this sample group may not be entirely representative of the overall worldwide app-developer market, it is a good indication of the demographic breakdown of the market.A demographic and business model September 2012 -6 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE 3#*14,+567$(5,189#(1:(+55(2##915#,) Who are the people developing the apps so integral to contemporary lives? The common stereotype of an app developer is that of a young male who works independently — typically not as a career but while in school or working another job — creating apps for the love of it, hoping to “make it big.” Is that accurate? To find out, GigaOM and the Application Developers Alliance conducted an extensive primary- research project exploring the app-developer market. Personal characteristics of app developers According to the survey, some of the stereotypical characteristics of app developers are true; others are not. For example, the survey determined that 94 percent of app developers are male. However, they are not as young as stereotypes suggest. Just over 20 percent of respondents are in their teens or early 20s, while nearly 60 percent are 30 or older, with 33 being the median age. Another misperception, somewhat tied to age, is the level of education app developers have completed. Most are not high school or college students developing apps on the side. More than 70 percent of app-developer respondents had a college degree, and nearly half of those (33 percent of total respondents) had completed some graduate work or earned a graduate degree.A demographic and business model September 2012 -7 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 1. Demographics of an app developerA demographic and business model September 2012 -8 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Source: GigaOM Pro Employment profile of app developers The majority of app developers are full-time employees, with app development accounting for all or a portion of their jobs. Full-time employees accounted for nearly 60 percent of survey respondents, with 65 percent of those individuals solely focused on app development and the other 35 percent engaging in app development as a portion of their jobs. Survey results indicate that the 40 percent of respondents participating in app development on a part-time basis are more likely to be individuals working other jobs (with app development being supplementary revenue) than high school or college students.A demographic and business model September 2012 -9 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 2. Respondents’ work status Source: GigaOM Pro While many app developers only work on developing apps part-time, the community has a high level of experience. Given that the mobile-app market as we think of it today is only five years old, the level of tenure is quite long. According to GigaOM’s survey results, nearly 30 percent of respondents have been developing apps for over four years, which makes them pioneers in the field. However, because app development is such a rapidly growing and evolving space, it attracts ample new talent to drive the market forward. Just over one-quarter of respondents have been in app development for less than a year.A demographic and business model September 2012 - 10 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 3. Respondents’ tenure Source: GigaOM Pro While app developers are largely an experienced group, with many working full-time in the industry, a large segment of the community earns relatively little income. Among those respondents providing income information, more than half reported that their annual income from app development was less than $15,000. That figure is somewhat expected, given that over 40 percent of respondents participate in app development on a part-time basis. However, despite the large number of developers earning less than $15,000, the average annual income among survey respondents was roughly $45,000, a figure that jumps to $75,000 if the segment earning less than $15,000 is removed from the average.A demographic and business model September 2012 - 11 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 4. Respondents’ income distribution Source: GigaOM Pro ;1,<(#/7,1/*#/0(:1,(+55(2##915#,) Developers tend to work either independently or in midsize firms (Figure 5). Very few work in small businesses of 4 to 9 employees. Two-thirds of survey respondents indicated they work either independently or in a group of 3 or fewer, while 19 percent work for development firms with 10 or more employees. The domination of small businesses in the app market has given this community a unique personality. A market that includes hundreds of thousands of small companies creates an innovative and competitive environment in which most firms have fairly equal footing and no single voice dictates the direction of market development. However, the lack of large, powerful companies makes representing the app developers’ interests in the larger app ecosystem (which includes giant companies like Apple and Google) difficult. Subsequent sections of this report will address other aspects of development strategy related to the size of a firm.A demographic and business model September 2012 - 12 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 5. Respondents’ business size Source: GigaOM Pro According to the survey results, the majority of respondents focus on 1 or 2 projects at a time, though one group of developers that represents less than one-quarter of the community tends to work on 4 or more projects, bringing the average number of current projects to 2.7.A demographic and business model September 2012 - 13 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 6. Respondents’ workload Source: GigaOM Pro With low barriers to entry and few starting costs, app development is an opportunity available to many individuals across many regions. However, app developers concentrate where app usage is highest. According to the survey results, North America accounted for 54 percent of respondents’ headquarters. That may have been influenced slightly by the fact that the survey was in part sourced from the Application Developers Alliance and GigaOM, which have a large percentage of members and readers in North America. North America, nevertheless, is the center of the app marketplace currently. Over time app development may shift overseas, as has happened with the software-development market. Western Europe also had strong representation, as did Asia-Pacific. Central America, Eastern Europe, and Africa had relatively light representation.A demographic and business model September 2012 - 14 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 7. Respondents’ geographic distribution Source: GigaOM Pro As would be expected, the regional focus for app localization tended to map to regional headquarters, so the regions with the higher concentrations of regional headquartersA demographic and business model September 2012 - 15 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE were those where apps were localized. In many respects, the app market is without boundaries. The apps themselves indicate that many app developers are now capitalizing on a global audience. Nearly 56 percent of respondents indicated they only develop one version of their applications, with which they intend to address a global audience. Even those developers who localize apps for specific markets usually localize for more than one region — at least two regions, according to the survey results. An app developer’s location and regional focus have an impact on strategic choices, just as the size of the firm does. Later sections of this report explore this in more depth. 3#7$#(5,#:#,#/$#) While app development initially focused solely on mobile phones, developers can now create apps for tablets or the emerging TV-app market. Ninety-five percent of survey respondents are currently developing an app for the mobile phone — the largest and most established market — or have developed one in the past year. While fewer developers create apps for tablets than for mobile phones, the gap has narrowed significantly. Table 1. Smartphone and tablet shipments (millions) 3#7$# =>?> =>?? =>?= !"#$%&()*+,%-&(./0 12 34 115 6,"7&+)8-%()*+,%-&(./0 429 ::2 ;45 Source: GigaOM Pro The tablet market has seen a large influx of developers over the past year or so: 80 percent, according to survey respondents. Just over 60 percent of mobile-app developers are new to the market, so the percentage of those creating tablet apps is now much closer to the percentage creating mobile apps.A demographic and business model September 2012 - 16 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 8. Respondents’ tenure in app development by device type Source: GigaOM Pro Survey results indicate that 70 percent of respondents are developing apps for tablet devices compared to 95 percent for mobile phones. Currently, just 11 percent are developing for the TV market, but this is a factor of the market’s youth and not its potential; an influx of developers to this space in coming years is likely.A demographic and business model September 2012 - 17 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 9. Respondents’ choice of device for app development Source: GigaOM Pro While smartphone and tablet apps have similar market structures and players as well as significant crossover in catalogs, in many aspects they are two unique markets. When developers choose to develop for a device, that choice has an impact on their platform preferences, the type of apps they develop, and the monetization and profitability of those apps. (Subsequent sections of this report will highlight the impact of device choice.)A demographic and business model September 2012 - 18 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE @9+A1,*(5,#:#,#/$#)B($%,,#/0(+/2(59+//#2 Figure 10. Respondents’ current and planned platforms for app development Source: GigaOM Pro One respondent noted, “IOS is still the king.” This statement is supported by the survey data: More developers are creating apps for iOS than for any other operating system, and by a significant margin. Currently 20 percent more developers are designing mobile-phone apps for iOS than for Android, the next leading platform. The discrepancy is even greater for tablet apps, where over 60 percent more developers design for iOS than for Android. Apple has created a venerable app ecosystem that is attractive to developers and encourages development for iOS. In the words of another respondent, “Developing for anything other than iOS is awful.” Android is gaining ground Even so, Android has been chipping away at the dominance of iOS over the past several years, and that trend will probably continue. Looking toward the next 12 months, respondents indicated a slight increase in their expected development for iOSA demographic and business model September 2012 - 19 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE but a large gain in their anticipated Android development. For mobile-phone apps, an additional 5 percent of respondents anticipated developing for iOS in 12 months versus an additional 9 percent developing apps for Android. In tablets, an additional 3 percent said they will develop for iOS, but an additional 12 percent said they would for Android. As illustrated in Table 2, the gap between developer representation for iOS and representation for Android will continue to decline for mobile phones and even more for tablets. Table 2. Variance between respondents developing for iOS and Android, current and future Variance between iOS and Android Mobile phone Tablet Current 12% 27% Future 8% 18% Source: GigaOM Pro Despite the rise in interest, Android continues to face challenges, particularly fragmentation. Android’s open-source operating system has encouraged many device manufacturers to design phones based on the OS, but with so many devices running different versions, often with different capabilities that can alter the end-user experience, the inconsistency can be daunting for developers. Another challenge for Android is creating a developer-friendly experience. To paraphrase one respondent, “Android has growing pains. Google and OEM are hesitant to make it easier for developers.” Further concentration of the top four phone platforms The app-development market is consolidating around the top operating systems as developers move away from operating systems with less market share. According to survey respondents, while the top four operating systems will see more developers creating apps in the next year, the others (except Brew) will see a decline (Figure 11).A demographic and business model September 2012 - 20 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE As a result, app development for the top operating systems will increase — and so will competition. Figure 11. Anticipated increase (or decrease) in respondents developing apps by mobile- phone operating system Source: GigaOM Pro Growth in Windows Exceeding the anticipated migration to Android is an expected migration to Windows for both mobile phones and tablets. Fewer than 30 percent of developers expect to create Windows apps in the next year, but that is a significant jump over the current number. Two comments drawn from the GigaOM survey illustrate the varying perspectives on Windows among developers: “I believe that Windows 8 and Windows Phone 8 will have a great potential.” “Windows Phone is not going anywhere and Windows tablet is uncertain (and unlikely).”A demographic and business model September 2012 - 21 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE The top three challenges for Windows, from a developer’s perspective, are devices, apps, and users. As the Windows-based operating system was late to the smartphone game, relatively few manufacturers are basing devices on its operating system. While Windows phones will likely become more prevalent, relatively few phones are on the market now, and with few devices available, the catalog of available apps is limited. With fewer apps currently on the market, developers creating apps for Windows will face less competition. There is also better discoverability in a less-crowded app marketplace. While this means less competition for developers, it also means weak consumer interest, as most phone buyers are looking for devices that will give them access to many applications. Added together, a limited selection of devices, a relatively bare library of apps, and weak consumer interest in Windows phones equal a low addressable market and low success for an app. Growth in HTML5 While native-app development will increasingly focus on iOS, Android, and (to a lesser extent) the Windows operating system, developers are also looking for alternatives. They are frustrated with the lack of cross-platform development tools and capabilities as well as with the restrictions that app stores place on them. HTML5 presents an opportunity for circumventing these problems. As one survey respondent wrote, “There is a desperate need for standards. [App development] cant continue the way it is . . . its getting really really difficult to develop for many platforms. HTML5 is the way.” However, HTML5 has its potential shortcomings. By nature it is not as integrated with the device and operating system as native apps are, so performance is often substandard to native apps. Also, mobile users have become very familiar with locating, downloading, and using native apps, so a shift to HTML5 will require consumer education and retraining — often a difficult task.A demographic and business model September 2012 - 22 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE C#+27/4(+55($+0#41,7#) Various sources categorize apps differently, but certain categories, such as gaming and social networking, are most often uniform. GigaOM divides apps into 16 categories (Figure 12). Figure 12. Respondents’ development by app category Source: GigaOM Pro According to survey results, the leading app-development category for both mobile phones and tablets is tools and utilities, by a margin of 10 percent. While the gaming market is well-publicized, results indicate a strong market for utilitarian apps that increase a device’s performance. Games ranked second, and business and finance ranked a close third. For most app categories, more respondents are developing for mobile phones than for tablets, but a few categories had higher concentrations in tablets, particularly entertainment areas such as e-readers, games, and video.A demographic and business model September 2012 - 23 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE D2(%)+4# As the application market shifts from a pay-to-download model to other revenue models, ads have become an important revenue source for some app developers. Surprisingly, only 25 percent of phone-app developers and 18 percent of tablet-app developers are incorporating ads in their applications. The reason may be the numerous barriers to implementing an effective ad strategy for mobile apps. Because it is a relatively new marketing medium, most companies’ mobile-ad budgets are small, and with the vast number of developers clamoring for those dollars, competition is fierce. Data charting the effectiveness of mobile-ad strategies and their capacity to target the appropriate audience and generate sales is scant. Mobile commerce has not been very robust to date, so brands are hesitant to allocate a significant portion of their advertising budgets to this medium. Figure 13. Respondents’ usage of ads in phone and tablet apps Source: GigaOM ProA demographic and business model September 2012 - 24 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Performance metrics: ad impressions and revenue Two measurements of a developer’s success integrating advertising into an app are ad impressions (a single member of the target audience viewing an ad) and ad revenue. For both phone and tablet apps, the majority of respondents who have integrated ads into their mobile apps experience fewer than 6,000 impressions per day. The average number of ad impression hovers around 12,000 per day and is slightly higher for mobile phones than for tablets. Figure 14. Average daily ad impressions Source: GigaOM Pro Survey results indicate that while the vast majority of developers are earning little ad revenue, a very few are earning significant amounts. More than one-third of developers earn less than $100 per month on ad impressions (on both phones and tablets); over 60 percent make less than $500 per month. However, the few earning large amounts pull average revenue up to $1,923 for phone apps and $1,253 for tabletA demographic and business model September 2012 - 25 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE apps. (On average, ad revenue for mobile-phone apps is 35 percent higher than for tablet apps.) These results were somewhat skewed upward by respondents making over $20,000 per month; discarding these outliers brings the average monthly income to $1,588 for phone apps. Figure 15. Average monthly ad revenue Source: GigaOM Pro According to survey results, Google’s AdMob is the unequivocal leader among ad networks. Founded in 2006 and one of the earliest mobile-advertising companies, AdMob attracted the attention of mobile giants Apple and Google in 2009 when they entered into a bidding war for the company. Google won and purchased AdMob for $750 million. AdMob offers advertising solutions for mobile platforms other than Android, too, including iOS and Windows Phone 7, as well as standard mobile web browsers. Apple’s advertising network, iAd, also had strong support among respondents. Founded in 2010, iAd is an in-app advertising system for developers, but it is specificA demographic and business model September 2012 - 26 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE to iOS. Millennial Media, another early market entrant (founded in 2006) is a platform-agnostic network. Although Millennial Media’s market share is reportedly just shy of Apple’s iAd, our survey shows significantly higher usage for iAd than for Millennial Media. Figure 16. Ad network utilized by respondents Source: GigaOM Pro @+72(+55) The majority of respondents are developing paid apps, which GigaOM defined for the survey as those requiring a fee to download or free apps offering opportunities for in- app purchases. Paid apps are more prevalent among mobile-phone-app developers than among tablet-app developers. Several studies have showed that the download rate of paid apps on tablets is higher than it is on smartphones, but GigaOM survey results indicate that developers are still more apt to create a paid app for a phone than for a tablet.A demographic and business model September 2012 - 27 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 17. Percent of respondents developing paid apps Source: GigaOM Pro While the majority of app developers have paid apps on the market, they do not have many. On average, respondents had 2.46 paid phone apps and 2.09 tablet apps on the market. Most often, companies (both large and small) contract developers to create branded apps. The developer then receives a job-based payment rather than ad fees or user-based payments.A demographic and business model September 2012 - 28 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 18. Number of paid apps that respondents have on the market Source: GigaOM Pro Based on survey results, the average fee for mobile-phone apps monetized through user-based payments is $2.71, with the majority priced at $1.99 or less. Tablets come in a little higher, at $3.25, with a higher percentage of apps priced at $2.99 or more. Only 11 percent of phone-app developers and 7 percent of tablet-app developers are monetizing through in-app purchases. The app revenue model has gone through a significant transition over the past several years. The original model, based on pay-per-download, or paid, apps, began to weaken as a slew of free apps appeared on the market. Developers began providing the basic app for free and then charging very small amounts for virtual goods and special capabilities within the app. This scheme allowed users to control their own level of participation in an app, so dedicated users would spend higher amounts while casual users paid less (or nothing). Developers often found that a recurring revenue stream of micropayments was more profitable than a single download fee. However, survey results indicate that respondents do not use the in-app payment model very much.A demographic and business model September 2012 - 29 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE In-app purchases, a relatively new method for revenue generation, are very popular in the gaming and social networking categories but less so in other sectors. Many developers view in-app purchases as a less solid revenue opportunity, while others are waiting to figure out what the best practices will be. Still others are concerned that these offers will degrade the user experience and discourage users from returning. With developers’ overall goal being user acquisition, they will not sacrifice an app’s reputation solely for in-app-purchase revenues. Figure 19. Average price point for paid apps among respondents Source: GigaOM Pro A developer’s motivation for incorporating user-based payment opportunities into an app is largely based on income potential. According to survey results, this income potential is not that strong for most developers. Only about 20 percent of respondents generated thousands of dollars per month from paid apps; the majority generated only a few hundred dollars.A demographic and business model September 2012 - 30 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 20. Respondents’ monthly income from paid apps Source: GigaOM Pro Comparatively, user-based payments are fairly equal to ad-based revenues, with the majority of developers earning several hundred dollars per month from each revenue source. Overall, however, with the relatively low earning potential for ad-based and paid apps, developers largely rely on contract fees as their primary revenue source. D55(*1/#&E+&1/(+/2($1,,#9+&1/(01(106#,()0,+0#4-( :+$01,) Monetization strategies are closely tied to other key strategic elements in app development and marketing. Developers who have embraced paid and ad-based apps are distinct from those who have not, both in demographics and in strategy decisions.A demographic and business model September 2012 - 31 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Correlation between paid apps and other strategy factors While the majority of survey respondents indicated they incorporate user-based payment opportunities into their applications, nearly 40 percent do not develop paid apps. Survey results demonstrate that developers creating paid apps differ from those who do not, both in strategy choices and in developer profile. Profile variances ! Paid-app developers usually have a longer tenure in the market. Nearly one- quarter of those developers without paid apps have been in the market for less than six months, compared to only 10 percent of respondents offering paid apps. With longer tenure, the paid-app developers have more experience integrating monetization opportunities. ! Somewhat correlated to the longer tenure, those who develop paid apps are usually older than those who do not. Nearly 70 percent of paid-app developers are over 30 years old, but only 50 percent of those who do not develop paid apps are that age. ! Paid-app developers are more likely to work independently and are less likely to be a part of a large firm. Table 3 compares the size of shop: that is, the independents versus large firms (those with 10 or more employees). Table 3. Paid-app vs. other app developer comparison: size of shop @+72F+55(2##915#,) G06#,(2##915#,) <-=%+%-=%-& ::> ?;> @"7A%B7, 1:> 42> Source: GigaOM ProA demographic and business model September 2012 - 32 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Strategy variances ! Paid-app developers are significantly more likely to use the iOS platform and significantly less likely to use the Android platform than those who do not develop paid apps, because iPhone users spend significantly more on applications than Android users do. As expected, this imbalance draws paid-app developers to the iOS platform. However, those who do not develop paid apps are also adopting the iOS platform: Fifty-nine percent currently use iOS, and 69 percent plan to use it in the next 12 months. ! Paid-app developers are significantly more likely to develop gaming apps than those who do not charge for their apps. While one-third of paid-app developers create gaming apps, only 13 percent of the other developers do. Paid-app developers focus on gaming, where in-app payments have flourished. Conversely, a significantly lower percentage of paid-app developers create location-based apps. Table 4. Paid-app versus other app developer comparison: platform preferences @+72F+55(2##915#,) G06#,(2##915#,) <C6 2?> ;D> E-=78*= :5> 35> Source: GigaOM Pro Correlation between paid apps and other strategy factors Just one-quarter of the developers responding to the survey incorporate ads in their apps. While developers of ad-based-apps are a minority segment, they have several characteristics that distinguish them from other app developers.A demographic and business model September 2012 - 33 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Profile variances ! Developers using ads usually have a longer tenure in the market than those who do not: Fifty-four percent of ad-based developers have been in the market for over two years versus less than one-third of those who do not use ads. As with paid-app developers, these percentages suggest a correlation between the level of experience and the use of monetization tools. ! App developers implementing ads have a higher concentration in midsize firms (four to nine developers) than other developers do: 28 percent versus 11 percent. Strategy variances ! While paid-app developers tend to favor iOS, ad-based-app developers concentrate more on Android, BlackBerry, and Samsung bada. Since iPhone users spend more on apps than users on other platforms, developers for non-iOS platforms are more likely to use ads or other nonuser-based revenues, because the success of paid apps on these platforms is not as strong.A demographic and business model September 2012 - 34 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Table 5. Ad-based-app vs. other app developer comparison: platform preferences @+72F+55(2##915#,) G06#,(2##915#,) <C6 34> 29> E-=78*= 35> ;4> F$"GHF%77IC6 4;> 1?> 6",(J-A#"=" 1:> 4> Source: GigaOM Pro ! Developers of paid apps often have a broader range of categories represented in their app portfolios than other developers, with the greatest variance in social networking and news, two app categories strongly associated with advertising. Table 6 lists other categories that have a relatively higher percentage of ad-based apps. Table 6. Ad-based-app vs. other app developer comparison: app categories @+72F+55(2##915#,) G06#,(2##915#,) 68G*"$-%&K87H*-A :1> 1D> L%K("-=K%"&)%7 4D> D> @8G"M8-N#"(%= ?3> 4?> 6+87&( 1:> 4> O",%( ?;> 4;> P%"$&)"-=B&-%(( 49> 19> @*Q%(&I$% 4D> 1D> Source: GigaOM Pro ! Ad-based-app developers often localize apps, because ads are usually specific to a market (either regional or national). While 53 percent of ad-based developers localize apps, only 42 percent of other developers do. Regions with the greatest concentration of localized apps are North America, Western Europe, and Central and South America.A demographic and business model September 2012 - 35 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE !*#,47/4(HIF+55(*+,<#0 Figure 21. Respondents developing apps for TV platforms and tenure in the market Source: GigaOM Pro According to GigaOM survey results, just 11 percent of respondents are developing apps for TV platforms. This is not surprising, given the low penetration of supportingA demographic and business model September 2012 - 36 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE devices in the nascent TV-app market, the small potential market, and the relatively few apps currently developed. Further highlighting the youth of TV apps, nearly three- quarters (73 percent) of respondents have been in the market for 12 months or less. Even with low participation, Google TV and Samsung TV are emerging as the market leaders and have the greatest percentage of developers creating apps for their platforms. Apple TV, which is among those with the fewest apps, has not yet signaled a strong — and public — commitment to the TV market. Apple recently referred to Apple TV as a hobby, a move that could generate hesitancy among the developer community and a reluctance to create apps for the platform. TV-app market share is still anyone’s to win and is very susceptible to development and marketing efforts. Current versus planned platform preferences revealed in the survey suggest that several platforms are poised for growth in the coming year. Google TV and Samsung should continue to do well, but significantly fewer developers plan to create apps for Yahoo Widgets than do at present. Survey results also indicate slight declines for Xbox Live Marketplace and Roku. The increased number of developers creating apps for LG TV and Apple TV over the next year will elevate both platforms to a more prominent position than they currently hold. Note, however, that the community of TV-app developers is still small, so survey sample sizes are small as well. This developing market and its preferences could change significantly, but the survey results still offer important insight into early market entrants.A demographic and business model September 2012 - 37 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 22. Respondents’ choice of TV-app platform: current and planned Source: GigaOm Pro At this early stage, social networking, lifestyle, and gaming apps are poised to be the leading TV apps. Video-entertainment apps such as YouTube, Vimeo (video sharing), and vTuner (internet-streamed media) are popular among early TV-app adopters and thus have a strong developer following. The TV-app market has the potential to merge many of these app categories so that users can engage with friends while they watch TV or interact with the programs themselves.A demographic and business model September 2012 - 38 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 23. Leading TV-app categories Source: GigaOM Pro Ads in TV apps Survey respondents use ads in TV apps much more than in phone and tablet apps (both of which have relatively few in-app ads). While 18 to 25 percent of developers integrate ads in phone and tablet apps, 40 percent of TV-app developers — nearly double that amount — are incorporating ads. The TV ads also appear to be more successful, at least in this early stage. While phone- and tablet-app ads averaged approximately 12,000 ad impressions per day, TV-app-developer respondents are achieving, on average, more than twice that number, reaching 25,000 impressions per day. TV-app advertising may be more lucrative as well. The pioneer developers responding to the GigaOM survey indicated that average monthly income from ads is $5,400. That is almost three times the amount phone-app developers earn.A demographic and business model September 2012 - 39 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Table 7. Comparison of ad success across devices: mobile phone, tablet, TV Mobile phone Tablet TV Percent of respondents integrating ads in apps 4;> 15> 40% Average daily ad impressions 12,288 11,786 25,315 Average monthly income from ads $1,923 $1,253 $5,411 Source: GigaOM Pro Paid TV apps As with ads in TV apps, GigaOM’s early research indicates that user-based payments will also fare well in the TV-app market. Table 8 illustrates that the average price paid and the average monthly income are higher for paid apps in the TV market than for paid apps in either of the other markets. While app developers for TV, tablets, and mobile phones have roughly the same number of paid apps available on the market, survey results show that the TV-app market is three times more lucrative. Table 8. Comparison of paid-app success across devices: mobile phone, tablet, TV Mobile phone Tablet TV Percent of respondents developing paid apps 31> ;?> 50% Number of paid apps currently available 2.46 2.09 2.58 Average price for paid app $2.71 $3.25 $4.40 Average monthly income from paid apps $2,286 $2,263 R3SD9D Source: GigaOM Pro Again, these results are based on a small community of developers, but they represent potential for interesting and lucrative trends going forward. If these early results prove true, the potential profit in this market will certainly attract many more developers.A demographic and business model September 2012 - 40 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE 3#*14,+567$(7*5+$0(1/(+55F2##915*#/0()0,+0#4- Discussion thus far has highlighted trends among the entire group of app developers, a broad and diverse community, but demographics such as the size of the firm, the region, and market tenure have a significant impact on who they are as developers, the types of apps they create, and their monetization strategies. Size of firm Initially, the key players in the app-developer market were small firms made up of just a few individuals, but as the market has matured, larger firms have emerged in the space. Small and large app-development firms are very different, with varying levels of resources, funding, and partner relationships impacting their app-development strategy. While small firms dominate the market, big firms dominate the app-store rankings, suggesting that success feeds success. Table 9 summarizes the key differences in small and large firms, which are further detailed in the following sections. Table 9. Comparison of solo and large app-development firms J191(+55(2##915#, C+,4#(+55(8,* T87H(&"&J( U"7&NM,% VJ$$NM,% !%-J7% W-=%714,8-&)( CX%71I%"7 6"$"7*%( @8K%7 P*A)%7 T87H$8"= @%(( /87% Y-=NJ(%7Q8GJ( U7*,"7*$IG8-(J,%7 Z8-(J,%7"-=#J(*-%(( E++$8G"$*["M8- U7*,"7*$IA$8#"$"++( @8G"$*[%="++( E++NG"&%A87I(&7%-A&) O",*-A FJ(*-%(( W(%8Q+"*="++( /"87*&I /*-87*&I U$"]87,=*X%7(*&I @*,*&%= F78"=%7 ^%X%$8+Q87,J$M+$%=%X*G%&I+%( L8 _%( Source: GigaOM ProA demographic and business model September 2012 - 41 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE The small app-development firm Small app-development firms, consisting of one to three individuals, make up the vast majority of the app market and accounted for two-thirds of the respondents to the GigaOM survey. These app developers are young, have recently entered the app market, and are often developers on a part-time basis. Among those working alone, 41 percent have been in the market for less than one year, while just over one-quarter of large firms have such short tenures. Approximately one-quarter (27 percent) work in app development full-time; more than half work in development part-time and hold another job. Many in this segment are currently hobbyists, but many also want to pursue app development as a career. Strategy differs between small and large firms in several key ways. ! Small firms usually focus highly on consumers and have less emphasis on business and other verticals. While consumers are the leading target market for developer firms of all sizes, a particularly high concentration of solo developers (88 percent) focuses on this segment. Only 69 percent of large firms target consumers. Often apps in the business and vertical markets are developed in association with third-party partnerships, which are more difficult for small firms to develop. ! Small firms are more likely than large to develop gaming apps, an element of their strategy that ties closely to their strong consumer focus: Thirty percent of small firms are developing gaming apps versus just 16 percent of large firms. Note, however, that since gaming is the most competitive app-development category, chances of a highly successful app are minimal. ! Small firms are most likely to utilize user-based payment opportunities, eitherA demographic and business model September 2012 - 42 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE pay-to-download models or in-app purchases. These opportunities are a relatively simple means for small developers to monetize their apps, but in the increasingly competitive app marketplace, paid-app profitability is deteriorating. ! Small firms are more likely to focus on phone apps and less likely to develop apps for tablets and TV platforms. Resources are scarce in a firm of one or two individuals, so they focus on devices with the largest user base and greatest potential for success. Similarly, these developers are less likely to develop on numerous platforms, so they often concentrate on developing for only one or two platforms. Case study: independent consultant (HT Applications) Individuals working independently rather than for an employer make up a large and diverse contingency in the app market of solo developers. They have varying levels of experience and range from hobbyists to career app developers. Most solo app developers (62 percent) are only involved in the space on a part-time basis, but a smaller group (27 percent) of independent consultants pursue app development as a full-time career. This case study highlights the activity of the independent app- development consultant HT Applications, a company based in the Netherlands and originated by Hessel van Tuinen. In 2010 van Tuinen began developing mobile apps, initially through freelancing projects. The success of several apps he launched as a freelancer provided credentials for contract work with local as well as international companies. His time is currently split between projects for European and American clients. He has launched several development businesses in addition to HT Applications, including GreenGrass (which is working together with HT Applications) and Friks Mobile. He is active, partnering with other companies including Siteworkers, NetSupport, and DotComello.A demographic and business model September 2012 - 43 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Van Tuinen initially focused entirely on iOS and developed numerous iOS applications that are currently available from the Apple App Store, including RescuePhone, A6.nl, IkbenZwanger, Keurslager, HTA Slider, and Tomke. He also expanded his development activities to include the releases of Android and Windows Phone 7 and is beginning to program for HTML5. Van Tuinen often focuses on developing applications for businesses rather than for the consumer market, as they are a faster, more reliable way to earn money. His clients are based in many countries and include both large and small businesses. Current projects include: ! ICommander: an iOS app for the fire department in Hayward, Calif. ! RescuePhone: a project for helping people in case of emergency that will work across iOS, Android, and Windows Phone 7 ! ConnectUs: an iOS app developed during the Apps Foundry Contest in Luxembourg ! Keurslager: an iOS app that 500 butchers in the Netherlands will use for collective use and sale of butcher products ! De Echte Bakker: an iOS and Android app that 200 to 300 bakeries will use for collective use and sale of bakery products ! A6.nl: a car-sales app for iOS and Android The large app-development firm In contrast to the solo app developer, who embodies the quintessential image of an app developer, the large firms that have emerged in the market have a very different demographic. Their employees have usually spent more time in the app market, and 68 percent are full-time app developers, who earn higher app-based annual salaries than most solo developers. Correlating with their size, these firms often have more appA demographic and business model September 2012 - 44 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE projects currently under way, with more than one-quarter of large firms working on six or more projects simultaneously. From a strategy perspective, large firms have several key characteristics: ! Large firms are more likely to localize apps, because they have more resources and can release multiple versions of an app. Additionally, these firms are more likely to have advertising partners that may wish to localize apps so that they can best reach target markets. ! A greater percentage of large businesses are focused on business users than solo developers are. Similarly, large firms have a higher concentration of developers creating business apps. ! A greater percentage of large firms are creating Android phone apps (69 percent) than iOS apps (67 percent), while solo developers are much more likely to use iOS (66 percent) than Android (42 percent). Large companies are also more likely to develop for HTML5 (47 percent) than solo developers are (36 percent). ! While solo developers are more likely to integrate paid opportunities into their apps, large firms are able to extract more profitability from paid apps. Among those that follow the paid app model, solo developers earn, on average, $564 per month from paid apps while large firms earn nearly ten times that amount, $5,314 per month. Note, however, that large firms also have ten times more developers creating the apps, so per developer, solo developers and large firms generate similar revenue from paid apps.A demographic and business model September 2012 - 45 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Regional app-market variations Just as other parts of the economy change from region to region, the app market varies considerably in different markets across the globe. The strongest markets for apps are aligned with those that have the highest smartphone penetration, and they include Asia-Pacific, North America, and Western Europe. However, even these three regions have significant differences in app markets and the developers that create for them. Asia-Pacific app-market variations Among the three largest app markets, Asia-Pacific is the most distinct in terms of app developers, who they are, and the strategies they choose. App developers in Asia- Pacific are usually younger than developers in other regions (by five years on average). Based on survey results, the average ages of developers are 29 in Asia-Pacific, 35 in North America, and 34 in Western Europe. Perhaps because they are younger, developers in Asia-Pacific usually have less experience than their counterparts in the other regions. Over half of developers in the region (55 percent) have been developing for less than a year, while the work history of roughly one-third of the total respondents is that short. Finally, while developers tend to be male worldwide, this is particularly true in Asia-Pacific: One hundred percent of the respondents in this region were male. From a strategy perspective, Asia-Pacific also has several distinguishing characteristics: ! Asia-Pacific developers are more evenly distributed across platforms, with less concentration on the top platforms, whereas developers in other regions concentrate on creating apps for the iOS and Android platforms. Based on survey results, 68 percent and 56 percent of respondents developed for iOS andA demographic and business model September 2012 - 46 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Android, respectively, but only 48 percent and 42 percent of the Asia-Pacific respondents develop for these platforms, respectively. The high price point of iOS-based devices is less appealing in the Asian market, where average salaries in many countries are significantly lower than those in North America and Western Europe. Thus, developers are less compelled to create for the iOS platform. Likewise, alternative platforms like BlackBerry, whose devices are highly popular in many Asian markets, have a higher concentration of developers than in other regions. ! Developers in Asia-Pacific usually concentrate on different app-development categories from the total respondent base (Table 10). Tools and utilities is the No. 1 app category for both, but more Asian developers are creating social networking apps. Table 10. Leading phone-app categories (percent of developers) across regions Asia-Pacific North America Western Europe Total Tools and utilities 42% Tools and utilities 38% Tools and utilities 34% Tools and utilities 38% Social network Games Business and finance Business and finance 27% 27% 32% 27% Business and finance Location-based Games Games 24% 27% 30% 25% Source: GigaOM Pro ! While the majority of developers in Asia-Pacific are creating consumer-focused apps, that majority is smaller than among total respondents (66 percent versus 77 percent). However, a greater percent of these developers are creating apps for business (one of the top three app categories in the region) and education. ! Developers in Asia-Pacific have the highest concentration of respondents developing apps for TV platforms (15 percent). The majority of leading TV manufacturers are based in Asia, making it a strong region in which to trial and introduce emerging TV apps.A demographic and business model September 2012 - 47 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE ! While more than 40 percent of North American and Western European developers often localize for their own markets, developers in Asia-Pacific are as likely to localize for the North American (21 percent) market as they are for their own markets (27 percent). ! Based on survey results, the average price point for a paid app in Asia-Pacific is much higher than it is in other regions: $4.25 in Asia-Pacific is nearly twice the $2.26 charged in North America or $2.21 in Western Europe. Even so, average income from paid apps for developers in the region lies between the North American average at the high end and Western Europe’s at the low end (Table 11). Note that the percentages in Table 11 take into account other regions (Central and South America, Eastern Europe, and Africa) that are omitted from the table. Table 11. Paid-app comparison across regions Use in-app Average price per Average monthly Develop paid apps purchase app paid-app income Phone Tablet Phone Tablet Phone Tablet Phone Tablet Asia-Pacific 58% 50% 21% 8% $4.25 $4.78 $0 $0 North America 59% 47% 12% 5% $2.26 $2.82 $2,500 $5,000 Western Europe 66% 64% 6% 10% $2.21 $2.83 $5,000 $2,500 Total 61% 52% 12% 7% $2.31 $3.05 $7,500 $7,500 Source: GigaOM Pro North America app-market variations North America, which is home to the largest percentage of developers in the GigaOM survey, is a very strong market for phone and tablet apps and contains a very large app-developer community with the highest average salary of the top three markets. The U.S. market offers good opportunities and its salaries are high, but the level of education among North American developers is not as high as it is among developersA demographic and business model September 2012 - 48 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE in Asia-Pacific and Western Europe; the percentage of those who have completed graduate work is roughly 30 percent less than in the other two regions. Table 12. Education and salary comparison across regions Asia- North Western Pacific America Europe Total Z8$$%A%A7"=J"&% 29% 45% 29% ?D> 68,%A7"=J"&%K87H87A7"=J"&%=%A7%% 42% 29% 41% ?:> Average salary R:1SD;2 R;3S:1? R?;S:42 R?3S:99 Source: GigaOM Pro ! North American developers create more apps for the iOS and Android platforms than total respondents do. ! Gaming is a particularly popular app-development category among North American developers, as are lifestyle apps. ! Monetization patterns in North America are somewhat distinct, with fewer developers pursuing ad-based and user-based revenue opportunities than total respondents do. But while fewer developers are creating paid apps, those who do are generating more income monthly from their paid apps than developers in other regions. ! North American developers usually carry the heaviest workload, with the highest percentage of respondents managing six or more app projects concurrently. Western Europe app-market variations Western Europe appears to be a very competitive, though not necessarily well- compensated, market for app developers. Its developers have often completedA demographic and business model September 2012 - 49 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE graduate-level studies (41 percent), but they also have the lowest average salary. On average, developers in Western Europe earn 37 percent less than their counterparts in North America, the highest compensated market. Developers in Western Europe are also less likely than those in other regions to be involved in app development as a full- time career and are more likely to be doing app development in a part-time capacity as part of a full-time job. ! Western European developers are less likely than their North American counterparts to create apps for iOS and especially less likely to develop for Android. This preference is unlikely to change in coming years, as future development plans concentrate less on the top two platforms there than in North America. In fact, while most developers in the survey are trending toward iOS, developers in Western Europe are actually trending away from it (Table 13). ! Developers in Western Europe are the most likely among the top three regions to develop paid apps (66 percent versus 61 percent of total respondents), but they have the lowest average salary from them. While the pay-to-download model is prevalent among Western European users, in-app purchases are relatively infrequent in this market. Table 13. IOS and Android development trends across regions Phone Tablet Current Planned Current Planned Android 42% 59% 50% 63% Asia-Pacific iOS 48% 75% 58% 71% Android 60% 68% 43% 59% North America iOS 72% 80% 76% 82% Android 51% 61% 31% 44% Western Europe iOS 71% 67% 69% 67% Source: GigaOM ProA demographic and business model September 2012 - 50 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Work status of app developers More so than in most other fields, the work status of app developers varies significantly across the community, ranging from those who develop apps just for fun to those who are pursuing a lifelong career. As expected, demographics influence the level of engagement and have a significant impact on strategy choices. For the purpose of this analysis, GigaOM segments app developers into three categories: Hobbyists. These individuals are pursuing app development on a part-time basis and may be students or employed in a different career and pursuing app development as a secondary activity. App development may be a non-income-generating leisure activity for these individuals, or income may be generated via consulting fees, ad-based apps, or paid-app opportunities. These individuals may have aspirations of full-time app development, but for various reasons they are not currently able to achieve that goal. Professionals. Professional app developers are engaged in app development as an element of their full-time jobs. App development may be their primary career interest or it may be a skill necessitated by their positions, but it is not necessarily a career focus. Career developers. Career app developers are engaged in app development as a full-time job. These individuals usually expect long-term involvement in app development and are pursuing it as a career. Hobbyist developers Hobbyists are segmented from the survey results based on their having chosen one of the following work categories:A demographic and business model September 2012 - 51 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE ! I work part-time in app development and also hold another job. ! I work part-time in app development and do not hold another job. Hobbyists often work independently (62 percent work alone) and have only been in the market a brief time; their average tenure is less than two years, compared with roughly three years for professional and career developers. Regionally, North America has the highest concentration of hobbyists. Strategic characteristics: ! Hobbyists often operate as a one-man shop and on a part-time basis, so they often work on only one or two projects at a time. The lighter workload coupled with their shorter tenure in the market results in fewer projects in their portfolios. ! Hobbyists do not have the bandwidth for multiple projects, so they usually try to achieve the broadest reach for their time. Consequently, nearly two-thirds of hobbyists create global apps rather than local apps that only reach a portion of the potential addressable market. Hobbyists also often focus on the consumer market, because it has a broader scale than business or vertical markets. Correspondingly, a significantly lower percentage of hobbyists create business apps or location-based apps than career and professional developers do. ! Hobbyists do not often have time to create multiple versions of an app for multiple platforms, so fewer of them than professional and career developers appear across the various app platforms. Survey results show a particularly low development rate for Android (46 percent) among hobbyists. Except for gaming, news, and reference apps, hobbyists also have much lower representation across app categories.A demographic and business model September 2012 - 52 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE ! Hobbyists are the most likely of the three segments to develop paid apps (66 percent for phone and 60 percent for tablet), but their apps usually sell at less than half the average price point of a professional developer’s apps ($2.11 versus $4.49). While hobbyists strongly favor the pay-per-download model, very few (5 percent of those developing paid apps) incorporate in-app-purchase opportunities. ! Lower paid-app price points translate into lower income for hobbyist apps. Many developers in this segment rely on paid-app and ad-based revenue (also low compared to other segments) for their app-generated income. For those paid a consultancy fee, average income is also lower, simply because it is only a part- time activity that generates a part-time salary. Average income for hobbyist developers was $26,000, less than half that of the average professional or career developer. Case study: connecting developers with projects (Work for Pie) One of the biggest challenges facing developers, particularly the new ones just entering the market, is connecting with available work projects. They have no central repository where they can shop for app-development projects. Since new developers do not have a broad portfolio of work to serve as a résumé, finding secure work and proving themselves capable is difficult. The team at Work for Pie is attempting to bridge the gap between available projects and developer talent. Co-founders Cliff McKinney and Brad Montgomery launched Work for Pie, a community for software developers and a platform for company discovery, in mid-2011. Work for Pie matches developers with companies based on mutual preferences, such as programming language, work environment, and so on. UnlikeA demographic and business model September 2012 - 53 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE traditional job-posting sites, Work for Pie aims to establish long-term relationships among companies and developers by encouraging close alignments based on these mutual preferences. Employers looking to hire app developers are still challenged by the idea of hiring people without college degrees or with a degree in an area other than programming. Without the traditional measurements of college degrees, which are not always applicable to this field, they are concerned about the presence of a skill set. Work for Pie provides employers reassurance by allowing them to see a portfolio that the developers create to showcase their work in lieu of a general résumé. Developers on Work for Pie receive an SAT-like score based on their public contributions to open-source projects and the larger development community. Work for Pie obtains this information from GitHub, Bitbucket, Stack Overflow, and Hacker News. The score is highly code-based and takes into account the developer’s history of useful projects or contributions to others’ useful projects, not educational background. Employers can use the score as an evaluation tool. Work for Pie relies on a subscription-based model, with companies paying a monthly fee to host their company profile. The company profile is a place where members can talk about their company culture, show off their team, and post project needs. The site’s goal is to develop long-term relationships with client companies, thus ensuring strong renewal rates. Work for Pie raised seed money in mid-2012 and is working to further develop the site through company discovery tools set to launch in September 2012. Professional developers Professional developers share no similarities in demographics or strategy choices with hobbyists. As described in the GigaOM survey, professional developers “work in appA demographic and business model September 2012 - 54 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE development in a part-time capacity as part of a full-time job.” These individuals may or may not have intended to pursue app development as a career, but development is now incorporated as an element of a full-time position. On average, they have a long tenure in the app market; nearly 30 percent of these respondents have been in the field for over five years, compared with only 10 percent of hobbyists. They also are highly educated, with 42 percent having completed graduate-level work. Professional developers are more evenly distributed between North America and Western Europe than other segments are, and they often work for larger companies, with nearly 30 percent working for firms with 10 or more employees. Professional developers usually carry a heavier workload and are involved in a larger number of projects. Strategic characteristics: ! Because they work for larger companies, professional app developers have access to more resources and must be able to develop for a broader range of platforms than the other two segments. Concentration is particularly high for HTML5, both in current phone- and tablet-app development as well as in plans for future development.A demographic and business model September 2012 - 55 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Table 14. Comparison of similarities across career, professional, and hobbyist developers K+,##,(2##915#,()L K+,##,(2##915#,()L 5,1:#))71/+9(2##915#, 61MM-7)0(2##915#, )7*79+,7&#) )7*79+,7&#) !%-J7%`F8&)A78J+(&%-=&8)"X%"$8-A%7 O%8A7"+)*G$8G"M8-`F8&)A78J+()"X%")*A) &%-J7%8Q78JA)$I&)7%%I%"7(SX%7(J(&K8I%"7(+%7G%-&#"(%=*-L87&)E,%7*G"G8,+"7%=&8 Q87)8##I*(&(` +78Q%((*8-"$=%X%$8+%7(` T87H$8"=`F8&)A78J+(&%-=&8,"-"A% U"*="++(`F8&)A78J+()"X%"(*,*$"77"&%8Q -J,%78J(+78%G&(SX%7(J()8##I*(&(SK)8&%-=+"*=N"++=%X%$8+,%-&G8,+"7%=&8 &88-$IK87H8-8-%&8&K8+78%G&( +78Q%((*8-"$=%X%$8+%7(` G8-GJ77%-&$I` U87]8$*8`F8&)A78J+(&%-=&8=%X%$8+Q87" U"*="++(`F8&)A78J+(+7*G%"++("&(*,*$"7 #78"=#"(%8Q+$"]87,(` 7"&%(S"7"&%&)"&*($%((&)"-)"$QK)"& +78Q%((*8-"$=%X%$8+%7(G)"7A%8-"X%7"A%` <-G8,%`!)%"X%7"A%*-G8,%Q87&)%(%A78J+( Z"&%A87IQ8GJ(`F8&)A78J+(&%-=&8)"X%" *(X%7I(*,*$"7"-=,87%&)"-&K*G%&)"&8Q )*A)%7G8-G%-&7"M8-*-$%*(J7%"-= )8##I*(&(.8X%7R39aX%7(J(R43a0` %-&%7&"*-,%-&"++(X%7(J(+78Q%((*8-"$ =%X%$8+%7(SK)8&%-=&8Q8GJ(8-#J(*-%(( "++(` 6*[%8QB7,`F8&)A78J+(&%-=&8K87HQ87 $"7A%7B7,(X%7(J()8##I*(&(SK)8&%-=&8K87H *-=%+%-=%-&$I87K*&)8-%87&K88&)%7 +%8+$%` Source: GigaOM Pro ! More professional developers create apps for the consumer audience than for business, but the gap is narrow. However, 53 percent of professional app developers target the business audience with business and location-based apps, which is more than the other two segments by a large margin (career, 37 percent; hobbyist, 30 percent). Comparatively, only a very small faction of this segment (8 percent) develops gaming apps, a top category for most developers. ! Professional developers are the least likely to develop ad-based and paid apps, but they generate the highest income from ad-based apps — an average of $4,000 per month.A demographic and business model September 2012 - 56 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Career developers According to the survey criteria, career developers “work full-time in app development.” They often pursue app development as their lifelong career and usually have a long tenure in the market. Career developers are more heavily concentrated in North America (59 percent) compared with professional developers (44 percent). Career-developer survey respondents have the longest tenure among respondent groups, with an average of almost three years of experience. Like professional developers, individuals in this segment are educated; only 8 percent lack education beyond a high school diploma. As with professional developers, career developers work for firms with multiple persons rather than solo or with one to two other individuals, and as with professional developers, they have heavier workloads and are involved in multiple projects. Strategic characteristics: ! Career developers create a significantly lower level of apps for HTML5; only 29 percent of phone-app developers and 23 percent of tablet-app developers create HTML5 apps. However, more career developers anticipate using HTML5 in a year’s time, jumping to nearly 40 percent. While growth in HTML5 usage will be significant, career developers anticipate an even heavier migration to iOS. Within 12 months 85 percent of career developers will create phone apps based on iOS, up from the current two-thirds, according to respondents’ development plans. ! Career developers tend to create apps for a broad base of categories and have a higher concentration in all app categories except gaming compared to the total respondent base. The leading app categories for this group are tools and utilitiesA demographic and business model September 2012 - 57 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE and social networking apps. ! Career developers are the least likely to incorporate advertising in applications, and those who do incorporate advertising generate the least income from this source compared to other developer segments. These developers are more apt to pursue paid apps, with over 60 percent incorporating these revenue opportunities into their apps. ! Career app developers usually have the highest average income, roughly $66,000 (slightly higher than the professional developer’s average income of $60,000).A demographic and business model September 2012 - 58 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE N1,#$+)0 Figure 24. Worldwide annual mobile-phone-app downloads (billions), by region Source: GigaOM Pro App-download rates will continue climbing over the next several years. GigaOM anticipates that annual mobile-app downloads will approach 31 billion in 2012, growing to nearly 56 billion in 2015. Tablets will offer a smaller opportunity, with annual downloads increasing from 5 billion in 2012 to 17 billion in 2015. Although tablet downloads will not approach the scale of mobile-app downloads, because of the relative nascence in the tablet market and rapid growth in device penetration, growth rates of tablet-app downloads will be significantly higher than growth rates of mobile- app downloads.A demographic and business model September 2012 - 59 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Figure 25. Worldwide annual tablet-app downloads (billions), by region Source: GigaOM Pro Factors impacting and potentially disrupting app growth over the forecast period include: ! Smartphone shipment growth. GigaOM anticipates smartphone shipments will continue to grow over the next several years, with annual unit shipments increasing from 528 million units in 2012 to 844 million units in 2015. ! Tablet shipment growth. Annual tablet shipments are expected to increase from 86 million units in 2012 to 145 million units in 2015. The vast majority of these shipments will represent new users, resulting in the rapid growth of the potential addressable market, which will be a significant factor in driving tablet- app growth. ! Cloud computing. The migration to cloud computing will have an impact onA demographic and business model September 2012 - 60 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE the app market in several ways. More-agile delivery of apps through cloud-based delivery systems will work to drive app growth. Cloud-based app-development tools will allow the faster creation of more-sophisticated apps and will further open the market of app development to novice developers. ! Business apps. Significantly fewer developers are currently focused on the business segment than on the consumer market, but the business opportunity continues to grow. This is especially true for tablet apps as a greater percentage of the workforce shifts from laptops to tablets over the next several years. ! Open sourcing. Open-source software development will continue to be a trend over the coming years. Organizations and enterprises will continue to favor open-source apps, thus driving developers to embrace open source in app development. ! Demographics. While a portion of new smartphone shipments will be replacement units for existing smartphone users, another portion will be original devices that will effectively increase smartphone penetration. This larger base of smartphone users will be significant in driving app downloads. While the new generation of smartphone owners will differ from early adopters, indications are that these individuals will also have a strong interest in apps and continue to support strong download rates. ! Nonnative apps. While native-app download rates will continue to escalate, nonnative apps will continue to emerge as an alternative to native. Nonnative apps have largely offered an inferior experience to native apps to date, but tools are emerging that allow developers experienced in HTML5 and Java to compete with native in feature sets. Nonnative app development, and the tools emerging to support it, will open the mobile-app market to a larger group of developers.A demographic and business model September 2012 - 61 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE Furthermore, developers are combining native with nonnative language, merging the two spaces. ! Democratization of app development. The number of app developers continues to grow. Enrollment in programs like Codecademy is on the rise, and tools like virtualized codes are opening the field of app development to new groups. The trend can be described as a democratization of programming; as the space is democratized and broadened, the number and diversity of apps in the market will continue growing and driving further consumer and business usage. ! Increased competition. The democratization of app development will result in greater competition in an already difficult market. Differentiation will become even more important for developer success, and tools to aid in that differentiation will become an emergent element of the market in the coming years. These tools will be critical in helping drive user-acquisition costs downward in an effort to restore profitability for all of those in the app-market ecosystem. ! New market entrants. In the current app market, operating system players (especially Apple and Android) have a lot of power over app developers. Should they change the rules of play, they could have a huge impact on the app market. The entrance of new market players, particularly those with a great deal of influence, like Amazon, could significantly shift the market structure as it now exists.A demographic and business model September 2012 - 62 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE K1/$9%)71/ This GigaOM study provides in-depth insight into the demographics of the app- developer community and explores how aspects of those demographics are having an impact on app-development strategies. While often operating as individuals, app developers are highly reliant on the community for support, a trend that will only grow stronger over the coming years. They are a highly educated group, operating as individuals or small companies, but they often lack expertise in all the aspects of app development needed to be successful. Furthermore, the influx of new talent entering the market is seeking resources to learn best practices. App developers are turning to community resources such as hackathons and organizations like the Application Developers Alliance to provide a wide variety of resources from programming tools to monetization strategies to job leads. These communities will provide a voice for developers, who often are underrepresented in the app economy. Community resources will be a key component of the app-developer market going forward, and they represent a significant market opportunity for companies to support the large and growing market of app developers.A demographic and business model September 2012 - 63 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE D55#/27"(DB(2##915#,()%551,0 The app-developer world is a community in the truest sense of that word, encompassing individuals with similar professions and interests who offer support and share knowledge through various forums as well as national and local app-developer groups such as the Application Developers Association. App developers are usually a collaborative group. As the popularity of hackathons has shown, they are anxious to share their knowledge and learn from others. In the rapidly changing and complex app-development space, developers (particularly startups) looking to keep pace with the latest tools and capabilities are turning to knowledge sharing and support resources. Besides the associations and events formed for this purpose, an increasing number of companies have emerged that support developers and offer them services. The following sections highlight a few of the specific needs that many developers share and the solutions emerging from companies that meet those needs. Case study: infrastructure (Twilio) The difficulty accessing the specific infrastructure necessary to support an application’s capabilities and the cost to obtain it can limit a developer’s vision for the application. Twilio is working to solve this problem by providing app developers with infrastructure capabilities. Founded in 2007 and based in San Francisco, this company provides developers with a telephony infrastructure web service in the cloud that allows them to integrate phone calls, text messages, and IP voice communications into their web, mobile, and traditional phone applications. The company provides infrastructure for developers to plug into the phone network so they can integrate the capability to make and receive phone calls or send and receive text messages using Twilio’s web service application programming interface (API).A demographic and business model September 2012 - 64 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE In addition, Twilio is actively engaging with developers, primarily through a team of developer evangelists whose customer-support service is much more proactive and involved than the standard customer call center. Communicating and interacting with the developers through events, hackathons, articles, and blogs, these evangelists encourage the transfer of knowledge while educating developers about Twilio’s APIs and giving support as they use them. Twilio has experienced significant traction with its cloud-based telephony service, announcing in June 2012 that it had passed the 100,000 mark in registered software developers. The company has grown from 25 employees in early 2011 to a current base of 125 employees. Twilio’s initial focus was on startups, but it has branched out into the enterprise market over the past several months. It is also expanding internationally. Largely funded by a December 2011 Series C funding round of $17 million, Twilio has extended coverage outside the United States to include fifteen European countries. Case study: programming tools (Temboo) Startups and hobbyists new to the field of app development — a large segment of the app-developer community — often need support to develop tools to create more- sophisticated and more-complex applications. While programming knowledge is shared through community organizations and hackathons, developers need a go-to source for programming tools that is continuously available. Temboo is working to become that source. Founded in 2006 and based in New York, Temboo has sought out the common sources of friction in software development and addressed them through a cloud-based library of ready-to-use processes it calls Choreos. Developers can integrate these ready-to-useA demographic and business model September 2012 - 65 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE processes right into their codes. The service is a visual-based tool that allows easy and intuitive usage, so in minutes developers can integrate functionality into their apps that might otherwise take hours or even days. Currently the Temboo library includes more than 1,200 Choreos that enable over 100 APIs. Developers can search the library with keywords such as Facebook, Foursquare, or Twitter. Temboo’s service is designed to serve the broad range of developers, from first-timers to veteran programmers, and it can be scaled to meet a range of needs, with pricing based primarily on the number of Choreos used. The company offers a free, basic tier followed by multiple paid tiers for everyone from the first-timer to the big-time developer, but the service’s back-end infrastructure was developed to meet the needs of its enterprise users. Case study: search and discovery (Hook Mobile) In a sea of over two million apps, one of the biggest challenges that all developers face is app discovery. Users have difficulty locating the apps they want, and developers have difficulty getting their app in front of their target audiences. Achieving desired success rates has become exceptionally difficult. Furthermore, with approximately 1 percent of app developers cornering the market, startup developers face a significant challenge getting traction for their apps. Hook Mobile has created the App Growth Engine (AGE), a patent-pending social invitation engine with greater conversion powers than traditional acquisition services. AGE allows developers and mobile marketers to generate new users, cut acquisition costs, and gain social insight in the new app economy. Once integrated, users gain the ability to invite their mobile contacts effortlessly from within the app: AGE’s mobile intelligence qualifies users’ app-compatible friends by scanning the numbers stored in their phone books. AGE then prepopulates invitation messages with the app’s title andA demographic and business model September 2012 - 66 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE link for immediate invite and download. Harnessing user phone books, the app will grow virally across social circles and reach untapped demographics. The theory behind AGE is that users are closely associated with their phone and number, because with number portability consumers rarely have to switch numbers. The intelligence in AGE enables app recommendations to be sent to qualified contacts, eliminating wasted leads for developers, thus having a higher efficiency rate than word of mouth or other conversion vehicles such as Facebook, Twitter, and email. AGE combines new user-acquisition capability with analyzing tools to monitor user data, conversion rates, and app trends. The solution also enables developers and publishers to accurately track users via their mobile number and boost user identity and associations by cross-referencing their carrier, device, and operating system information. Ultimately the solution is a mechanism that cuts user acquisition costs from the range of several dollars up to $7 in acquisition costs per new user to possibly just several cents per user. The AGE tools give developers and publishers a better understanding of their users and their users’ friends so they can leverage that information through a crowdsourced marketing effort launched through users’ address books. Launched in March 2012 and now in beta, AGE is Hook Mobile’s most recent product, but the company has been building its core competencies for years, offering cloud- based mobile APIs and software development kits (SDK) that power mobile messaging and device detection, mobile user and content intelligence, and text-based audience responses. The company’s clients include top movie and media studios, mobile messaging and content providers, and large Internet companies. Created in Vienna, Va., in 2006, Hook Mobile receives funding and support from four leading venture capital firms — IDG-Accel Partners, Amplifier Ventures, Acta Capital, and 500 Startups — as part of an elite portfolio of technology firms that also includes Facebook, Rovio, and Millennial Media.A demographic and business model September 2012 - 67 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved
    • MOBILE DM1%0(D*-(K,+#/) Amy Cravens is a longtime technology market analyst with domain expertise across a number of areas, including telecommunications, networking, media, software, and hardware. From 2001 to 2003 she was a lead analyst for In-Stat, helping to pioneer the company’s hotspot and Wi-Fi analysis. Since 2006 she has been involved in a number of projects for companies as well as market research vendors as an independent analyst. DM1%0(O74+GP(@,1 GigaOM Pro gives you insider access to expert industry insights on emerging markets. Focused on delivering highly relevant and timely research to the people who need it most, our analysis, reports, and original research come from the most respected voices in the industry. Whether you’re beginning to learn about a new market or are an industry insider, GigaOM Pro addresses the need for relevant, illuminating insights into the industry’s most dynamic markets. Visit us at pro.gigaom.com DM1%0(06#(D5597$+&1/(3##915#,)(D997+/$# The Application Developers Alliance is an industry association dedicated to meeting the unique needs of application developers as creators, innovators, and entrepreneurs. Alliance members include more than 10,000 individual application developers and dozens of companies, investors, and stakeholders in the apps ecosystem.A demographic and business model September 2012 - 68 -analysis of today’s app developer © GigaOM Pro, All Rights Reserved