Mobile Applications Futures 2010 2015. Portio Research Ltd
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Mobile Applications Futures 2010 2015. Portio Research Ltd

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Complete market sizing and forecasts for mobile apps markets worldwide 2009 to 2015

Complete market sizing and forecasts for mobile apps markets worldwide 2009 to 2015

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Mobile Applications Futures 2010 2015. Portio Research Ltd Mobile Applications Futures 2010 2015. Portio Research Ltd Document Transcript

  • Mobile Applications Futures 2010-2015 © 2010, Portio Research. All Rights Reserved 1
  • Mobile Applications Futures 2010-2015 Portio Research Limited. Published October 2010 by Portio Research Limited © Copyright 2010. www.portioresearch.com info@portioresearch.com Disclaimer and Legal Notices Disclaimer Every care has been taken in the preparation of this study to ensure that the information contained herein is accurate, factual and correct to the best of our knowledge, at time of publishing. All opinions, suppositions, estimates and recommendations included in this document are solely the opinions of the authors unless otherwise stated. Portio Research Limited accepts no liability for any loss or damage or unforeseen consequential loss or damage arising from the use of the information contained within this document. The opinions, suppositions, estimates and recommendations within this document cannot be guaranteed, and readers use this information at their own risk. The information published in this document is subject to change without notice at any time, and Portio Research Limited accepts no liability or obligation to inform the reader of such changes. Portio Research Limited do not promote or endorse any specific companies or products, the views and opinions we express in this document are wholly our own assessments, and independent from any external interest or influence. Many terms and phrases and trade names used in this document are proprietary and Portio Research Limited recognises and acknowledges that all trademarks are copyright, belonging to their respective owners. Where possible, this document accords such terms and phrases and trade names to their respective owners. All Rights Reserved. No part of this document can be copied, shared, redistributed, transmitted, displayed in the public domain, stored or displayed on any internal or external company or private network or electronic retrieval system, nor reprinted, republished or reconstituted in any way without the express written permission of the publisher. Forwarding of this electronic document without the correct legal licence is theft. It’s unethical, immoral and against the law. If you have any questions about the legal licence conditions under which this document has been distributed, please contact Portio Research on info@portioresearch.com If you did not buy this document and a colleague or associate has sent it to you, do not assume you are legally entitled to read it, it is your responsibility to ensure you have the correct legal licence to read this document. 2 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Contents Introduction ..............................................................................................................................9 Worldwide Mobile Market ......................................................................................................12 Worldwide .......................................................................................................................................... 12 Mobile Applications Market...................................................................................................16 Growth of Mobile Applications Business ............................................................................................ 16 Evolution of Mobile Applications Market .......................................................................................... 17 Monetising the Mobile Applications Business .................................................................................. 17 Changing Market Dynamics ............................................................................................................ 18 Types of Mobile Applications ............................................................................................................. 19 Comparing the Popularity and Potential of Different Application Types ............................................. 21 Opportunities for Stakeholders .......................................................................................................... 23 Advertisers ...................................................................................................................................... 23 Owners – Smartphone Vendors and MNOs .................................................................................... 23 Developers ...................................................................................................................................... 23 Application Stores ........................................................................................................................... 24 Role of Handsets in the Uptake of Mobile Applications ...................................................................... 24 iPhone and the Growth of Mobile Applications ................................................................................ 24 Popular Mobile Application Stores ..................................................................................................... 26 Types of Application Stores ............................................................................................................. 26 Apple App Store .............................................................................................................................. 27 Google Android Market ................................................................................................................... 28 BlackBerry App World ..................................................................................................................... 29 Nokia Ovi Store ............................................................................................................................... 30 Windows Marketplace ..................................................................................................................... 31 Comparison of Application Stores ................................................................................................... 32 Market Size..............................................................................................................................34 Forecast Methodology ....................................................................................................................... 34 Market Size ........................................................................................................................................ 35 Mobile Application User Base ......................................................................................................... 35 Mobile Application Downloads ........................................................................................................ 38 Mobile Application Revenues – Application Sales, Advertisements and In-app Payments ............. 39 Regional Trends .....................................................................................................................46 Drivers and Inhibitors ......................................................................................................................... 47 Drivers ............................................................................................................................................. 47 Inhibitors.......................................................................................................................................... 48 Profiles of the US and UK Markets .................................................................................................... 50 Criteria for Selecting these Markets ................................................................................................ 50 The US ............................................................................................................................................ 51 The UK ............................................................................................................................................ 53 Value Chain .............................................................................................................................57 Business Models ....................................................................................................................60 App-centric Model .............................................................................................................................. 61 SWOT Analysis – App-centric Model .............................................................................................. 62 Operator-centric Model ...................................................................................................................... 63 SWOT Analysis – Operator-centric Business Model ....................................................................... 65 Blend of App-centric and Operator-centric Business Models ............................................................. 65 SWOT Analysis – Blend of App-centric and Operator-centric Business Models ............................. 66 Case Studies – Application Stores .......................................................................................68 Mobile Application Stores: Worldwide ................................................................................................ 68 Case Study: Apple App Store (North America) .................................................................................. 72 Business Model ............................................................................................................................... 72 Pricing ............................................................................................................................................. 72 Popular Mobile Applications ............................................................................................................ 72 Success Factors .............................................................................................................................. 73 Challenges ...................................................................................................................................... 73 Recent Developments ..................................................................................................................... 74 © 2010, Portio Research. All Rights Reserved 3
  • Mobile Applications Futures 2010-2015 Case Study: Vodafone 360 (Europe) ................................................................................................. 75 Business Model ............................................................................................................................... 75 Pricing ............................................................................................................................................. 75 Popular Applications........................................................................................................................ 75 Success Factors .............................................................................................................................. 76 Challenges ...................................................................................................................................... 76 Recent Developments ..................................................................................................................... 77 Case Study: China Mobile’s Mobile Market (Asia Pacific) .................................................................. 78 Business Model ............................................................................................................................... 78 Popular Mobile Applications ............................................................................................................ 78 Success Factors .............................................................................................................................. 79 Challenges ...................................................................................................................................... 79 Recent Developments ..................................................................................................................... 79 Case Studies – Popular Applications ..................................................................................81 Facebook ........................................................................................................................................... 81 Facebook Milestones ...................................................................................................................... 82 Features of Facebook ..................................................................................................................... 83 Pricing ............................................................................................................................................. 84 User Base ....................................................................................................................................... 84 Success Factors .............................................................................................................................. 84 Scope/Type of Advertisements ....................................................................................................... 85 Recent Developments ..................................................................................................................... 85 Pandora ............................................................................................................................................. 86 Pandora Milestones......................................................................................................................... 87 Features of Pandora........................................................................................................................ 88 Pricing ............................................................................................................................................. 89 User Base ....................................................................................................................................... 89 Success Factors .............................................................................................................................. 90 Scope of Advertisements ................................................................................................................ 90 Recent Developments ..................................................................................................................... 90 Future Outlook........................................................................................................................92 Current Growth Phase ....................................................................................................................... 92 Emerging Trends in the Enterprise Segment .................................................................................. 93 The Road Ahead ................................................................................................................................ 93 Disruptive Technologies ..................................................................................................................... 95 Augmented Reality .......................................................................................................................... 95 Cloud Computing ............................................................................................................................ 95 Future of Mobile Application Stores and Business Models ................................................................ 95 Conclusion ..............................................................................................................................98 Current Scenario ................................................................................................................................ 98 Incentives for stakeholders in the Mobile Applications market ........................................................ 99 Market Response ............................................................................................................................... 99 Market Diversification – A Move to Alternate Devices...................................................................... 100 Appendices ...........................................................................................................................102 Glossary ........................................................................................................................................ 103 Portio Research Classifications ..................................................................................................... 115 Companies Mentioned in this Report ............................................................................................ 116 About the Authors.......................................................................................................................... 120 Also available from Portio Research Limited ................................................................................... 121 4 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 List of Figures Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Figure 11: Figure 12: Figure 13: Figure 14: Figure 15: Figure 16: Figure 17: Figure 18: Figure 19: Figure 20: Figure 21: Figure 22: Figure 23: Figure 24: Figure 25: Figure 26: Figure 27: Figure 28: Figure 29: Figure 30: Figure 31: Figure 32: Figure 33: Figure 34: Figure 35: Figure 36: Figure 37: Figure 38: Figure 39: Figure 40: Figure 41: Smartphone User Base – Worldwide (In Millions, 2009 – 2015F) ....................................... 9 Mobile Subscribers — Worldwide (In Million, End 2009 – End 2015F) ............................. 12 Worldwide Mobile Subscriber Base — Regional Contribution (2009) ................................ 13 Worldwide Mobile Subscriber Base — Regional Contribution (2015F) ............................. 13 Top 10 Countries by Mobile Subscriber Additions — Worldwide (In Million, End 2009 – End 2015F) ....................................................................................................................... 14 Top 10 Countries by CAGR of Mobile Subscriber Base — Worldwide (In Percent, End 2009 – End 2015F) ........................................................................................................... 14 Mobile Applications with In-app Payment Features in the US – Apple iPhone (In Percent, June 2010) ........................................................................................................................ 18 Most Popular Paid Content – The US (June 2010) ........................................................... 21 Break-out of Available Applications at Application Stores by Games and Non-Games (Worldwide, August 2010) ................................................................................................ 22 Break-out of Mobile Applications Revenue (Excluding In-app Payments) by Application Stores (In Percent, 2010F)................................................................................................ 24 Apple’s App Store – Total Application Downloads............................................................. 25 Break-out of Available Mobile Applications by Free and Paid Application Type – The US (In Percent, July 2010) ...................................................................................................... 26 Break–out of Available Applications by Type – Apple App Store (In Percent, August 2010) .......................................................................................................................................... 27 Break–out of Available Applications between Games and Non-Games – Google Android Market (In Percent, August 2010) ..................................................................................... 28 Break–out of Available Applications by Type – BlackBerry App World (In Percent, August 2010) ................................................................................................................................ 29 Break–out of Available Applications by Type – Nokia Ovi Store (In Percent, July 2010) ... 30 Break-out of Available Applications by Type – Windows Marketplace (In Percent, EndAugust 2010) .................................................................................................................... 31 Mobile Applications User Base – Worldwide (In Million, 2009 – 2015F) ............................ 35 Worldwide Mobile Application Users – Regional Contribution (In Percent, 2009) ............. 36 Worldwide Mobile Application Users – Regional Contribution (In Percent, 2015F) ......... 37 Mobile Applications User Base Growth by Region (In Percent, 2009 – 2015F) ................ 37 Mobile Applications Users as a Percentage of Total Regional Mobile Subscribers – Regional (In Percent, 2009 and 2015F) ............................................................................ 38 Mobile Application Downloads – Worldwide (In Billion, 2009 – 2015F) ............................. 38 Mobile Applications Revenue – Worldwide (In USD Billion, End 2009 – End 2014F) ....... 40 Mobile Applications Sales and Advertisement Revenues – Worldwide (In USD Billion, 2009 – 2015F) ........................................................................................................................... 40 Worldwide Mobile Applications Sales and Advertisement Revenues – Regional Contribution (In Percent, 2009) ......................................................................................... 41 Worldwide Mobile Applications Sales and Advertisement Revenues – Regional Contribution (In Percent, 2015F)....................................................................................... 42 Growth of Mobile Applications Sales and Advertisement Revenues by Region (In Percent, 2009 – 2015F) .................................................................................................................. 42 In-app Payment Revenues – Worldwide (In USD Billion, 2009 – 2015F) .......................... 43 Break-out of In-app Payment Revenues by Type – Worldwide (In Percent, 2009)............ 43 Break-out of In-app Payment Revenues by Type – Worldwide (In Percent, 2015F) ......... 44 Drivers of Mobile Applications ........................................................................................... 47 Inhibitors of Mobile Applications ........................................................................................ 48 Mobile Application Downloads – Top 3 Countries (In Million, 2009) .................................. 50 Basic Value Chain of the Mobile Applications Market ....................................................... 57 App-centric Business Model .............................................................................................. 61 SWOT Analysis – App-centric Business Model ................................................................. 62 Operator-centric Business Model ...................................................................................... 63 Revenue Sharing in the Case of Third-party Stores Using Operator Billing ...................... 64 SWOT Analysis – Operator-centric Business Model ......................................................... 65 Blend of App-centric and Operator-centric Business Models ............................................ 66 © 2010, Portio Research. All Rights Reserved 5
  • Mobile Applications Futures 2010-2015 Figure 42: Figure 43: Figure 44: Figure 45: Figure 46: Figure 47: Figure 48: Figure 49: Figure 50: Figure 51: SWOT Analysis – Blend of App-centric and Operator-centric Business Models ............... 66 Mobile Application Stores Split – By Ownership Category (In Percent, July 2010) ........... 68 Facebook Milestones ........................................................................................................ 82 Features of Facebook for Mobile Users ............................................................................ 83 Facebook – Mobile User Base .......................................................................................... 84 Pandora Milestones ........................................................................................................... 87 Features of Pandora for Mobile Users ............................................................................... 88 Pandora – Mobile User Base............................................................................................. 89 Mobile Application Downloads and Revenue – Worldwide (2009 – 2015F) ..................... 92 Growth in Mobile Applications Available at Apple’s App Store and Google’s Android Market – Worldwide (In ‘000s, August 2009 – July 2010) ............................................................. 93 Figure 52: Mobile Application Users as a Percentage of Mobile Subscriber Base – Worldwide (In Percent, 2009 – 2015F) .................................................................................................... 94 Figure 53: Incentives for the different stakeholders ............................................................................ 99 Figure 54: Growth in the Number of Mobile Applications Stores (December 2009 – July 2010) ...... 100 6 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 List of Tables Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Table 10: Table 11: Table 12: Table 13: Table 14: Table 15: Table 16: Table 17: Table 18: Table 19: Table 20: Table 21: Table 22: Table 23: Table 24: Table 25: Table 26: Table 27: Table 28: Table 29: Table 30: Table 31: Table 32: Mobile Subscribers — Worldwide (In Million, End 2009 – End 2015F) ............................. 12 Types of Applications Prevalent in the Mobile Applications Market ................................... 19 Most Popular Paid and Free Applications, Apple App Store (The US, July 2010) ............. 27 Most Popular Paid and Free Applications, Google Android Market (The US, July 2010) .. 28 Most Popular Paid and Free Applications, BlackBerry App World (US, July 2010) ........... 29 Most Popular Paid and Free Applications, Nokia Ovi Store (The US, July 2010) .............. 30 Most Popular Paid and Free Applications, Windows Marketplace (The US, July 2010) .... 31 Comparison of Application Stores ..................................................................................... 32 Mobile Applications User Base – Regional (In Million, 2009 – 2015F) .............................. 36 Mobile Application Downloads – Regional (In Million, 2009 – 2015F) ............................... 39 Mobile Applications Sales and Advertisement Revenues – Regional (In Billion, 2009 – 2015F) .............................................................................................................................. 41 Smartphone Users – Regional (In Million, 2009 – 2015F) ................................................. 46 Regional Drivers – An Overview........................................................................................ 49 Most Popular Paid and Free Applications – Apple App Store (The US, July 2010) ........... 51 Most Popular Paid and Free Applications – Google Android Market (The US, July 2010) 52 Most Popular Paid and Free Applications – BlackBerry App World (The US, July 2010) .. 52 Most Popular Paid and Free Applications – Windows Marketplace (The US, July 2010) .. 53 Most Popular Paid and Free Applications – Apple App Store (The UK, August 2009) ...... 53 Most Popular Paid and Free Applications – Google Android Market (The UK, August 2009) .......................................................................................................................................... 54 Most Popular Paid and Free Applications – Symbian Horizon (Worldwide, July 2010) ..... 54 Most Popular Applications Paid and Free – Vodafone 360 (The UK, July 2010)............... 55 Mobile App Stores – By OS Vendors, By MNOs, By Smartphone Vendors (Worldwide, July 2010) ................................................................................................................................ 69 Mobile App Stores by Third-Party Vendors (Worldwide, July 2010) .................................. 70 Top 10 Mobile App Stores by Total Downloads (Worldwide, June 2010) .......................... 70 Significant App Stores – Regional (June 2010) ................................................................. 71 Most Popular Paid and Free Applications – Apple App Store (North America, February 2010) ................................................................................................................................ 73 Most Popular Applications, Vodafone 360 (Europe, September 2009 to March 2010) ...... 76 Most Popular Paid and Free Applications – China Mobile’s Mobile Market (China, July 2010) ................................................................................................................................ 79 Success Factors – Facebook Mobile Application .............................................................. 84 Success Factors – Pandora Mobile Application ................................................................ 90 Mobile Application Users as a Percentage of Regional Mobile Subscriber Base – Regional (In Percent, 2009 – 2014F) ............................................................................................... 94 Total Mobile Application Downloads for Major Application Stores (In Million, End-June 2010) ................................................................................................................................ 98 © 2010, Portio Research. All Rights Reserved 7
  • Mobile Applications Futures 2010-2015 Chapter 1 Introduction 8 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Introduction Mobile phones today not only provide seamless connectivity and communication, but are also an essential source of information, entertainment and productivity, and often enable users to perform tasks which could previously only be completed on desktops and laptops. All new interactive features and services, such as Internet connectivity, social networking, blogs and discussion forums, gaming, music, news, navigation and location-based services, are all available to users on their mobile devices. The mobile market is growing at an exponential rate, and even witnessed an increase in the mobile subscriber base during the recent economic downturn. Promising prospects and huge potential have encouraged market players to innovate and develop advanced mobile services and applications. Mobile handset vendors, mobile network operators (MNOs) and other key stakeholders are all collaborating together to develop new devices and services to retain subscriber interest. Handset vendors are constantly trying to offer new handsets and features to be able to differentiate their portfolio, and this competition is especially intense in the smartphone arena. Smartphones – with large screen sizes and high resolution, along with advanced computing capabilities and abundant memory – allow users to download, install and run advanced applications. Moreover, the availability of high-end applications over high-speed Internet has propelled the growth of smartphones. The worldwide smartphone user base is forecast to grow at a Compound Annual Growth Rate (CAGR) of 25.3 percent between 2009 and 2015. The worldwide smartphone user base is forecast to grow at a CAGR of 25.3 percent between 2009 and 2015. Figure 1: Smartphone User Base – Worldwide (In Millions, 2009 – 2015F) 1,170.6 Smartphone User Base (In Million) 1,200 1,010.0 1,000 853.6 800 705.0 561.7 600 436.0 400 302.4 200 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Source: Portio Research Ltd. F – Forecasted The adoption of smartphones is a key driver for the growth of mobile applications. The success of mobile applications is largely derived from the huge success of Apple’s iPhone and the massive number of apps downloaded by iPhone users in the last two years. In addition, the availability of high-speed data networks and operators’ efforts to increase mobile broadband penetration are further fuelling growth in the mobile applications market. The increasing potential in the applications market has encouraged new and established players, including smartphone vendors, MNOs and software developers, to invest their time, effort and money in innovating applications and relevant content for users. These players are developing their own app stores or are partnering with third-party store owners to offer © 2010, Portio Research. All Rights Reserved 9
  • Mobile Applications Futures 2010-2015 new applications and services, which in turn help them to differentiate their offerings, increase customer loyalty and generate new revenue streams. Mobile Applications Market App store owners are taking proactive initiatives to stay ahead of the competition and cater to the varied needs of users. The following factors are among those that help create a successful app store: 1. 2. 3. 4. 5. Ease of use Variety of applications Pricing Payment options Handsets supported In addition, advertisements and in-app payment features have been identified as essential ingredients for driving the growth of mobile applications, and are expected to play a major role in penetrating the market and enhancing the growth prospects of mobile apps. App store owners are recognising that one route to success lies in integrating applications with the ad-world. In-app payments have impressive potential and have become a major contributor to total mobile application revenues. The ‘in-app payment’ feature allows app stores to implement a ‘freemium’ strategy to increase awareness of their offerings and attract a large user base. ‘Freemium’ applications are trial or lite versions of premium applications that are generally available for free, and the ‘freemium’ model allows app stores to couple their free products with premium value-added features such as digital assets and gaming goods. In 2009, games and social networking sites accounted for a major portion of in-app payment revenues. The measurable success of in-app payment functions in games and social networking sites has encouraged app stores to install in-app payment functions in other niche applications. Region-wise, the mobile applications market has witnessed strong growth in North America, because of its larger smartphone subscriber base, availability of advanced networks and high mobile broadband penetration. However, due to a steep increase in smartphone shipments and users, Europe is expected to outperform North America over the next five years and achieve the largest regional applications user base by end-2015. App store owners have now acknowledged the growth prospects in emerging markets, wherein there is an increasing demand for value-added services on-the-go, and rising popularity and availability of smartphone devices. App store owners need to devise innovative strategies, such as attractive pricing, multiple payment options and customised applications, to be able to succeed and benefit from the growing demand in emerging markets. 10 © 2010, Portio Research. All Rights Reserved Europe is expected to outperform North America over the next five years and achieve the largest regional applications user base by end2015.
  • Mobile Applications Futures 2010-2015 Chapter 2 Worldwide Mobile Market © 2010, Portio Research. All Rights Reserved 11
  • Mobile Applications Futures 2010-2015 Worldwide Mobile Market Worldwide Our new subscriber forecasts reveal that the worldwide mobile subscriber base is projected to grow at a CAGR of 7.9 percent between 2009 and 2015, and is expected to reach nearly 7.4 billion by end-2015. Asia Pacific and Africa and Middle East (AME) will outpace other regions in subscriber growth between 2009 and 2015. Figure 2: Mobile Subscribers — Worldwide (In Million, End 2009 – End 2015F) Mobile Subscribers (In Million) 10,000 CAGR = 7.9% 8,000 6,000 4,655.8 5,254.6 5,787.1 6,262.5 2012F 7,037.9 2013F 7,351.5 2014F 6,675.1 2015F 4,000 2,000 0 2009 2010F 2011F Year Source: Portio Research Ltd. F – Forecasted Table 1: Mobile Subscribers — Worldwide (In Million, End 2009 – End 2015F) 1 Mobile Subscribers (In Million) 2009 2010F 2011F 2012F 2013F 2014F 2015F CAGR (In Percent, 2009-2015) Western Europe 499.9 518.3 530.5 540.7 549.3 556.6 562.8 2.0 Eastern Europe 538.4 560.3 584.6 600.5 613.0 622.8 630.3 2.7 Asia Pacific 2,132.1 2,521.2 2,856.5 3,156.4 3,416.5 3,643.9 3,838.1 10.3 North America 313.5 334.6 352.1 368.0 382.2 395.0 406.3 4.4 Latin America 494.0 534.8 574.4 608.1 637.9 663.9 686.5 5.6 Africa and Middle East 677.9 785.4 889.0 988.8 1,076.1 1,155.7 1,227.5 10.4 Total 4,655.8 5,254.6 5,787.1 6,262.5 6,675.1 7,037.9 7,351.5 7.9 Region Source: Portio Research Ltd. 1 Note: The total number may not add up to the sum of regional numbers because of rounding off errors. 12 © 2010, Portio Research. All Rights Reserved Asia Pacific and Africa and Middle East (AME) will outpace other regions in subscriber growth between 2009 and 2015.
  • Mobile Applications Futures 2010-2015 The percentage contribution of the Asia Pacific and AME regions to the worldwide subscriber base is expected to increase over 2009-2015, at the expense of the remaining regions that will see declines during the same period. The increase in subscriber base share for the Asia Pacific and AME regions can be ascribed to the strong subscriber base growth in the emerging markets. Figure 3: Worldwide Mobile Subscriber Base — Regional Contribution (2009) 45.8% 6.7% 10.6% 14.6% 11.6% 10.7% Western Europe Eastern Europe Asia Pacific North America Latin America Africa and Middle East Source: Portio Research Ltd. Figure 4: Worldwide Mobile Subscriber Base — Regional Contribution (2015F) 2 5.5% 52.2% 9.3% 16.7% 8.6% 7.7% Western Europe Eastern Europe Asia Pacific North America Latin America Africa and Middle East Source: Portio Research Ltd. 2 Note: The total may not add up to 100 percent because of rounding off errors. © 2010, Portio Research. All Rights Reserved 13
  • Mobile Applications Futures 2010-2015 The figure given below depicts the top-10 countries by mobile subscriber additions between 2009 and 2015 worldwide. 900 833.3 750 600 402.4 450 71.6 63.3 54.0 The Philippines 85.4 Egypt 87.3 Bangladesh 104.0 Brazil 126.4 150 The US 300 49.9 Vietnam Nigeria Indonesia China 0 India Mobile Subscriber Additions (In Million) Figure 5: Top 10 Countries by Mobile Subscriber Additions — Worldwide (In Million, End 2009 – End 2015F) Country Source: Portio Research Ltd. F – Forecasted The figure given below depicts the top-10 countries by CAGRs of mobile subscriber base between 2009 and 2015 worldwide. Figure 6: Top 10 Countries by CAGR of Mobile Subscriber Base — Worldwide (In Percent, End 2009 – End 2015F) 3 21.3% 16.1% 15.4% 15.4% 13.1% 13.1% 12.9% 12% 11.5% 11.0% DR Congo 17.2% 18% Qatar CAGR (In Percent) 24% 6% Mozambique Egypt Lesotho Bangladesh Uganda Nigeria India Sudan 0% Country Source: Portio Research Ltd. F – Forecasted 3 Note: CAGRs were calculated to four decimal places with each country securing a distinct CAGR value. Due to rounding off to one decimal place, a few countries appear to have the same CAGR. 14 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Chapter 3 Mobile Applications Market © 2010, Portio Research. All Rights Reserved 15
  • Mobile Applications Futures 2010-2015 Mobile Applications Market Mobile applications are functionalities provided to users by software that performs specific tasks. These applications now come pre-installed on handsets, or can be downloaded by users and installed on their handsets. Mobile applications are rapidly changing the nature of the mobile industry, supporting the ongoing transformation of handsets from simple communication devices into gadgets with powerful information, entertainment and productivity features, as well as boosting the use of mobile data services. The marketplace for mobile applications is highly fragmented. The mobile applications ecosystem encompasses platform developers, application developers, aggregators, mobile operators, handset and operating system (OS) vendors, and application store owners. Prominent players in the market include Apple (Apple App Store), Google (Android Market), Nokia (Ovi Store), Research In Motion (BlackBerry App World), Microsoft (Windows Marketplace), GetJar and Pocketgear, each offering an application storefront to users. Mobile applications can only be downloaded on to handsets that have an operating system and an application programming interface (API) capable of interacting with these third party applications. Some of the popular operating systems are Symbian, BlackBerry, iPhone OS, Microsoft Windows Mobile, Android, Linux and WebOS. Some applications also require supporting platforms, such as Brew, Java and FlashLite. Content and applications add a dimension of multi–functionality to handsets and are being used by handset vendors as differentiating factors for their devices. Users’ demand to do more with their handsets has increased the attractiveness of the mobile applications market, and in turn has created opportunities for smartphone vendors, OS vendors and application developers, and has led to the market entry of many new players. The mobile applications market has become competitive and all stakeholders are fighting for a share in the market. Mobile applications are used by both the consumer and enterprise segments. The consumer segment selects applications from app stores and installs them on their handsets or smartphones, whereas – typically – enterprise users have applications selected and installed on their devices by the enterprise on their behalf. A wide variety of mobile applications are available in the market, offering different features and options, and the extent to which they require network connectivity depends on their functionalities. Some apps (such as browsers, chat clients, social networking sites, multi player games) require continuous network connectivity, while others (such as audio–video players, address book, dictionary, MS–office, image and graphics viewer) do not require any connectivity or only require intermittent network connectivity (such as e-mail clients and news reader apps). Growth of Mobile Applications Business Mobile applications have created a lot of hype in the market and have witnessed huge expansion since the launch of Apple’s App Store in July 2008. Apple owned over 95 percent 4 of the mobile applications market in 2009 driving much of the growth in the market, and the success of the App Store has prompted others to follow, with MNOs, handset and OS vendors, and independent companies all keen to jump on the app store bandwagon. The primary factors driving the growth of the mobile applications market are the growing popularity of smartphones and consumer demand for such apps. Also, mobile access to high-speed data networks and affordable tariff plans have led to a continuous growth in mobile broadband penetration, providing a much needed impetus to the mobile applications market. In addition, developers are attracted to the mobile applications market with its favourable revenue sharing models and accessible distribution channels for their apps. 4 Source: http://arstechnica.com/apple/news/2010/01/apple-responsible-for-994-of-mobile-app-sales-in-2009.ars 16 © 2010, Portio Research. All Rights Reserved Mobile applications can only be downloaded on to handsets that have an operating system and an application programming interface (API) capable of interacting with these third party applications.
  • Mobile Applications Futures 2010-2015 Evolution of Mobile Applications Market The mobile applications market has evolved from the mobile content market of the past, where open platforms – such as BREW, Symbian, Palm and others – introduced APIs allowing third-party developers to create content for their platforms. However, what was missing then, to achieve the same success as today, was the commercial channel to promote and distribute such content and services. Apple has engineered the success of its App Store by not only allowing developers to produce creative content and applications for consumers, but also by changing the way content is distributed, through its direct distribution mechanism that bypasses content aggregators, content retailers and mobile operators. Consumers get the content they need with convenient app search, download and payment features, while developers receive their fair share of revenue. The success of Apple App Store has inevitably led to others in the mobile space following suit and introducing their own application storefronts. Today, there are a rapidly increasing number of app stores in the market, with no signs of the trend slowing. Handset and platform vendors, including Nokia, RIM, Microsoft, Google, Sony Ericsson and others, have launched their application stores; MNOs, including Vodafone, Orange, TIM, O2, Verizon Wireless, China Mobile and others, are quite active in the mobile applications space; and – demonstrating that mobile apps present great opportunity for all – third-party players and independent retailers are also entering the mainframe mobile applications market. Monetising the Mobile Applications Business Business models for mobile applications have also evolved over time, with market players now experimenting with different models to monetise the mobile apps market. Apps are available not only as paid downloads, but also for free as ad-sponsored downloads. In addition, in-app payments are catching on fast, creating new revenue streams for developers. Developers create basic or lite versions of some applications that are launched for free, but which have built-in in-app payment options that facilitate subsequent purchases by the users. Recent developments relating to the use of in-app payments as a means of monetising the mobile apps market include: • Fortumo, a mobile payment solutions provider, is offering Android developers its mobile payment Software Development Kit (SDK) covering 40 countries worldwide. Moreover, in June 2010, the firm announced its plans to cover 50 countries and to launch its services in Latin America and Africa by end-2010. The payment solution enables developers to charge users through operator billing. 5 • In June 2010, PayPal, an online payment enabler, introduced its Adaptive Payments service that permits users to make in-app payments with credit cards. This allows users to make direct online payments even if they do not have a PayPal account. 6 • In April 2010, PayPal announced the launch of PayPal solutions enabling in-app payments for iPhone and Android applications. In Q2 2010, PayPal launched in-app payment services in Australia, Canada, France, Italy, the Netherlands, the UK and the US. 7 • BOKU, a payment platform for Android phones, was launched in June 2009. The firm allows users to make payments through their operator accounts (charges included in operator billing). In June 2010, it launched BOKU Payments SDK which enables Android developers to offer in-app payment features through an in-app billing library. 8 As these developments attest, in-app payments are expected to be a key tool for facilitating revenue generation in the mobile apps market. Moreover, in-app payment enablers are 5 Source: http://www.mobilecommercedaily.com/fortumo-rolls-out-in-app-payments-for-android-developers/ Source: http://www.digitaltransactions.net/newsstory.cfm?newsid=2568 7 Source: http://thenextweb.com/mobile/2010/04/24/paypal-offer-app-purchases-iphone-android/ 8 Source: http://www.rev2.org/2010/06/04/boku-launches-in-app-billing-for-android/ 6 © 2010, Portio Research. All Rights Reserved 17 In-app payments are expected to be a key tool for facilitating revenue generation in the mobile apps market.
  • Mobile Applications Futures 2010-2015 providing options for operator billing for in-app purchases, which simplifies app purchases – as users no longer require credit cards or other online payment accounts (e.g. PayPal). Apple is a front-runner in the adoption of in-app payment features in its mobile applications. The prominence of in-app payments in some of the key content categories for Apple’s App Store in the US is depicted in the figure below. Figure 7: Mobile Applications with In-app Payment Features in the US – Apple iPhone (In Percent, June 2010) Mobile Applications with In-app Payment Features (in Percent) 5% 4% 4% 4% 3% 3% 3% 2% 2% 1% 1% 0% Games Social Networking Navigation Productivity Music News/Weather Period Source: Apple, Portio Research Ltd. App stores are also experimenting with different payment mechanisms, such as direct billing through payment gateways, operator billing and in-app purchases. While Apple has built its success on direct billing through the iTunes account, operator billing is the most preferred mechanism in the mass market. Changing Market Dynamics As noted earlier, the marketplace for mobile applications is highly fragmented. Mobile operators and platform providers are focusing on launching their own app stores, while there is intense competition among independent application developers and third-party aggregators. This is pushing down application prices making it commercially challenging for the applications ecosystem; however, the lower price of apps is helping to stimulate demand. Also, the industry is witnessing both consolidation and the formation of consortiums to better challenge Apple’s supremacy. In April 2009, Vodafone, China Mobile, SoftBank and Verizon Wireless established a Joint Innovation Lab (JIL) to develop mobile Internet services including mobile applications, for their combined worldwide customer base of over 1.1 billion. 9 The initiative is also being supported by leading handset vendors including LG Electronics, Research In Motion (RIM), Samsung Electronics and Sharp. Consolidationwise, the recent acquisition of Handango by PocketGear makes the latter one of the largest cross-platform independent app stores, with a catalogue size the second largest after Apple’s App Store. 10 The apps market has huge potential, with mobile applications already having captured consumers’ attention and imagination, but there remain challenges that could restrict the growth of the market and its ability to achieve this full-potential. For example, the ad-funded 9 Source: http://www.vodafone.com/start/innovation/jil.html Source: http://corp.pocketgear.com/press,release20100223,PocketGear-Acquires-Handango-Creating-theWorlds-Largest-Cross-Platform-Open-App-Store.html 10 18 © 2010, Portio Research. All Rights Reserved While Apple has built its success on direct billing through the iTunes account, operator billing is the most preferred mechanism in the mass market.
  • Mobile Applications Futures 2010-2015 model will be more popular in Asia Pacific, along with ‘freemium’ applications (trial or lite versions of premium applications that are available for free); this region will witness high app downloads if app pricing strategies are effectively executed. Also, app store owners will have to provide multiple payment options, including operator billing and integrated in-app purchases, particularly to users in emerging markets, due to a low penetration of credit cards. Thus, these regional nuances will have to be balanced accurately to maximize the success of mobile apps. Types of Mobile Applications To satisfy the varied needs of users, there are numerous free and paid applications available in the market, typically concentrated towards the convenience and entertainment needs of users. Apple alone provides a wide spectrum of over 250,000 applications for iPhone, iPod Touch and iPad users. The following table provides a list of different types of applications prevalent in the mobile applications market. Table 2: Types of Applications Prevalent in the Mobile Applications Market Games Productivity/ Enterprise Multimedia Communication Travel Utilities Arcade Directory Service Image Viewer Social Networking City Guide Screen Saver/Themes Action Calendar Audio/Video Player E-mail Client GPS/Maps Profile Manager Puzzle/ Word Game LocationBased Service (LBS) Presentation Viewer Instant Messaging (IM) Client Flight/Train Tracking Task Manager Role Playing Calculator Karaoke Player Mobile Internet browser Currency Converter Address Book Strategy Banking and Finance Audio/Video Recorder On–Device Portal Scheduler File Manager Simulation Spreadsheet Radio Sports/Racing Word Processor Casino/Cards News/ Weather Antivirus Search Board Game Source: Portio Research Ltd. • • 11 Games – ‘Games’ have been the most lucrative app type in the mobile applications market, to-date. Handset and OS vendors are working on innovative ways to improve the user experience by providing interactive user interfaces, improved audio and graphics, and larger screen sizes and resolution for a more intense gaming experience. Games on social networking sites are also gaining popularity. The top 10 games on Facebook alone have a user base of 458.3 million. 11 Productivity/Enterprise – Productivity applications prove popular as they allow users to make presentations and edit word documents on-the-go, manage data and schedule meetings, access bank accounts and make payments on the move, and identify the location of persons, objects or places, etc. Examples of such apps include: Documents Source: http://gorumors.com/crunchies/largest-social-game-developers-on-facebook/ © 2010, Portio Research. All Rights Reserved 19 The top 10 games on Facebook alone have a user base of 458.3 million.
  • Mobile Applications Futures 2010-2015 to go (BlackBerry, Apple, Windows and Symbian Mobiles), eOffice (BlackBerry), Microsoft office Mobile (Windows Mobile), and Multi–Reader (Apple). • Multimedia – Multimedia apps have further transformed handsets into personal multimedia devices. Multimedia applications allow users to record media content, playback stored audio and video files, stream audio and video content from Web browsers, and view images and presentations, etc. Examples of such apps include: mspot (music player), Deezer (radio), Concert vault (streaming videos), Pic Paint (edit pictures) and YouTube downloader video box. • Communication – Communication applications give users greater freedom to instantly connect and communicate. These apps allow users to chat with other users, write blogs and start discussion forums, send and receive e-mails, and browse the Internet via their smartphones. The growth of communication apps is being driven by the need to be accessible and approachable, and to build social networks. Examples of such apps include: Facebook and MySpace (social networking sites), Nimbus (chat client), Opera Mini (web browser) and Google Mobile Client (e-mail client). • Travel – These applications offer various travel features to users. For instance, installed apps might offer users on-the-go access to flight schedules, city guides including popular tourist attractions and hotels, weather forecasts, currency exchange rates, and GPS and navigation maps. Itinerary apps help users to plan their vacation and guide them during their vacation. • Utilities – With a range of services such as Profile Manager, Task Manager, Call Manager and Address Book, today’s mobile user is empowered to prioritise their tasks, contacts and other useful content. For example, a typical task manager application will allow a user to save a to-do list and shopping list; the user can then tick the list of grocery items with a click of button. A call manager enables users to connect with peers effectively and can be integrated with Microsoft Outlook, or customer relationship management (CRM) systems such as ‘Salesforce’ or ‘Microsoft dynamics’. Users can also personalise their response to incoming calls. The address book enables users to centrally store contact numbers along with other details, including e-mail addresses, social media and IM addresses. The file manager helps users store, manage and prioritise the folders. 20 © 2010, Portio Research. All Rights Reserved The growth of communication apps is being driven by the need to be accessible and approachable, and to build social networks.
  • Mobile Applications Futures 2010-2015 Comparing the Popularity and Potential of Different Application Types The figure below depicts the popularity of different types of applications based on the number of downloads of paid applications in the US for leading application stores. Figure 8: Most Popular Paid Content – The US (June 2010) 12 Apple App Store Windows MarketPlace 37% 32% 44% 53% 15% 19% Games Entertainment Other Nokia Ovi Store Games Tools Other BlackBerry App World 31% 46% 30% 47% 23% Games Utilities Other 23% Themes Games Other Source: Distimo and Portio Research Games are the most popular and most downloaded paid content in the US mobile applications market. At the Apple App Store, 53 percent of paid content is accounted for by games. 13 The popularity of games is also clear from the BlackBerry App World data, though BlackBerry handsets are perceived to be for the enterprise segment. The limited availability of alternative gaming sources and the presence of micropayment options (mobile transactions that involve small sums of money) are driving the growth of mobile games in developing nations. Gamers can now try different games through micropayment options on their mobiles. The figure below depicts the break-out of available applications in leading application stores by games and non-games applications. 12 13 Source: http://www.slideshare.net/distimo/distimo-mobile-20-europe-presentation Source: http://mobile20.eu/2010/06/21/state-of-play-of-mobile-app-stores-presentation-distimo/ © 2010, Portio Research. All Rights Reserved 21 At the Apple App Store, 53 percent of paid content is accounted for by games.
  • Mobile Applications Futures 2010-2015 Proportion of Gaming Applications (In Percent) Figure 9: Break-out of Available Applications at Application Stores by Games and Non-Games (Worldwide, August 2010) 100% 80% 60% 67.7% 85.4% 87.7% 84.5% 94.0% 40% 20% 32.3% 14.6% 12.3% 0% Apple App Store Google Android Market 15.5% 6.0% BlackBerry App Nokia Ovi Store* World Windows Marketplace Mobile Application Store Games Non-Games Source: Portio Research Ltd. *Note: The break-out for Nokia is for July 2010. The mobile applications market is witnessing a paradigm shift with the introduction of tools such as e-Readers, in so much as books are now trumping games to the position of ‘total number of active applications’ at the Apple App store. In August 2010, the number of book applications reached 43,250 compared with 36,250 games. This reflects the growing user interest in reading books while-on-the-go, and the introduction of iPad is expected to be one of the key drivers for the future growth of books apps. Social networking sites have already made a big impact on the market, and the use of mobiles to access social networking sites and update their statuses – via installed social networking apps for the likes of Twitter and Facebook – is gaining popularity. Locationbased technology combined with status updates is expected to gain popularity – for example ‘Facebook Places’. The success of social networking sites presents a potential opportunity for advertisers, since the sites have the capability to profile and segment target customer bases. 22 © 2010, Portio Research. All Rights Reserved In August 2010, the number of book applications at Apple App Store reached 43,250 compared with 36,250 games.
  • Mobile Applications Futures 2010-2015 Opportunities for Stakeholders The mobile applications market is highly fragmented, with stakeholders both fighting for market share and seeking ways to monetise applications – all the while as this very competition drives down the prices of paid apps. Advertisers The growing popularity of mobile applications has created attractive opportunities for advertisers. With a mobile application user base of 38.7 million at end-2009, advertisers see the potential for placing adverts in mobile apps. Mobile advertisements covered a critical mass of users and generated estimated revenues of over USD 80 million in 2009, while revenue generated through ad-placements in mobile applications is expected to reach nearly USD 250 million in 2010. Adverts can be delivered to consumers in the following ways: • Built into mobile applications such as games, e–books and online TV • Adjoined with downloaded or streaming audios and videos • Placed next to search results • Displayed on Web browsers and websites accessed by mobile users • Sent via text and multimedia messages Placing advertisements within a mobile application generates new streams of revenue for application publishers, developers and app stores. This additional revenue helps users in two ways—reduced application prices, or large numbers of free applications and services that are made available to users. Meanwhile, application stores and developers are able to maximise the number of users and increase their reach. Owners – Smartphone Vendors and MNOs Smartphone vendors and MNOs have developed their own developer communities to be able to launch their own application stores. Besides generating new streams of revenue for themselves, the objective of launching their own app stores is to increase customer loyalty and stickiness towards their products and services. Since handsets have become so much more than mere communication devices, mobile applications are now effectively a prerequisite for users, and so owning an application store becomes a requirement for smartphone vendors and MNOs to be able to acquire new customers and concurrently minimise customer churn. Developers To satisfy the ever increasing needs of users and to stay ahead of the competition, application stores are required to add new apps to their portfolios, on a regular and frequent basis; and it is this need for continuous development of new applications that justifies the high demand for developers in the mobile market. Developers normally get 60-70 percent of the revenues generated from mobile application sales, and the growing demand for apps and favourable revenue split of 70/30 between developer and mobile store is attracting large numbers of individual developers and development companies. The integration of advertisements with mobile applications has opened new avenues of revenue generation for developers. Moreover, technology advancements in platform development facilitate the development process, minimise the development and deployment time, and quicken the revenue generation process. There is a huge potential for mobile applications in developing markets. However, since user demographics and preferences vary from one region to another, application providers are required to introduce localised apps to succeed in a particular region, and this need for localised applications is further driving the demand for developers. © 2010, Portio Research. All Rights Reserved 23 Revenue generated through ad-placements in mobile applications is expected to reach nearly USD 250 million in 2010.
  • Mobile Applications Futures 2010-2015 Application Stores The phenomenal success of Apple’s App store – recording 6.5 billion downloads in little over two years since its launch – has drawn many other players into the mobile applications market. Application stores offer apps across different types – such as games, productivity, multimedia, travel, communications and utilities – to meet the varied demands of mobile users, and make money from paid applications, advertisements and in–app purchases. Worldwide mobile applications revenue (excluding in-app payments) is forecast to be nearly 3.1 billion at end-2010. Apple App Store is expected to be the biggest contributor with revenues of nearly USD 1.6 billion in 2010. Figure 10: Break-out of Mobile Applications Revenue (Excluding In-app Payments) by Application Stores (In Percent, 2010F) 7.0% 6.0% 36.0% 51.0% Apple App Store Google Android Nokia Ovi Others Source: Portio Research Ltd. Role of Handsets in the Uptake of Mobile Applications With a growing demand for data services, mobile users are seeking devices that bring together technology and entertainment, to extend handset functionality beyond just voice calls or messaging. Users’ demands for converged devices with multiple features, such as intuitive touch interfaces, high-resolution cameras, Web browsers, integrated GPS and WiFi, have proliferated the demand for smartphones; and in turn smartphones – with their operating systems enabling app downloads – are helping boost the uptake of mobile apps. iPhone and the Growth of Mobile Applications Apple App Store has been the catalyst for growth in the mobile applications market. Apple has spurred the growth of mobile apps by engaging end users with their compelling devices and backing these up with its extensive library of mobile applications at the Apple App Store. The Apple App Store became an instant success with 10 million applications downloaded within three days of the store’s July 2008 launch, but the store’s success is inextricably linked to the phenomenal success of Apple’s devices; as of August 2010, Apple has sold 120 million iOS devices 14 including the iPhone, iPod Touch and iPad. The iPhone revolutionised the smartphone market with a large touch screen, engaging interface and exciting features and functionalities, and has transformed the behavior of mobile users and the way people communicate and consume data-based services. There are 250,000 applications available at the Apple App Store (as of end-August 2010) and consumers have downloaded more than 6.5 billion applications on their Apple devices. It is fair to say that the App Store is promoting sales of iPhones, and that the iPhone is increasing the demand for mobile applications. 14 Source: http://www.techtree.com/India/News/Apple_ships_over_120_million_iOS_devices/551-112737-615.html 24 © 2010, Portio Research. All Rights Reserved Worldwide mobile applications revenue (excluding in-app payments) is forecast to be nearly 3.1 billion at end-2010. Apple App Store is expected to be the biggest contributor with revenues of nearly USD 1.6 billion in 2010.
  • Mobile Applications Futures 2010-2015 Apple also changed the game for developers with a simple, yet powerful distribution platform that both reaches a large user base and offers an incentivised revenue share. In addition, the single device API makes the Apple App Store more attractive to developers, as it provides an application marketplace without the need for them to worry about the different device SDKs, screen sizes/resolutions, processors, etc. The key factors that determine the success of application stores are the choice of applications available and convenience; this includes convenience for both user and developer communities, in terms of the ease of discovery of applications, one-click download features, trouble-free billing and payment options. The Apple App Store provides a wide choice of applications across different categories, along with application reviews and recommendations, etc. Also, the store is well-managed with convenient billing and payment features. Thus, Apple’s compelling service experience and the application ecosystem is what is keeping both users and developers happy. This is evident from a growing number of downloads at the Apple App Store and the phenomenal success it has achieved since its July 2008 launch. “Three billion applications downloaded in less than 18 months – this is like nothing we’ve ever seen before. The revolutionary App Store offers iPhone and iPod touch users an experience unlike anything else available on other mobile devices, and we see no signs of the competition catching up anytime soon.” Steve Jobs CEO, Apple, Inc. The Apple App Store registered 6.5 billion downloads to-date as of end-August 2010. The following figure shows the App Store’s performance since its launch in July 2008. Figure 11: Apple’s App Store – Total Application Downloads 6,500 5,500 6000 5000 4,000 4000 3,000 3000 2,000 2000 1,000 10 100 Sep-08 1000 Jul-08 Downloads (In Million) 7000 Aug-10 Jun-10 Apr-10 Jan-10 Sep-09 Apr-09 0 Period Source: Apple, Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 25 The key factors that determine the success of application stores are the choice of applications available and convenience.
  • Mobile Applications Futures 2010-2015 Popular Mobile Application Stores Application stores are the primary channel to access and download mobile applications. Application stores are classified on the basis of who owns the store (in the value chain), and the different types of app stores are mentioned below: Types of Application Stores • Stores by OS vendors: Google Android, Microsoft Windows Marketplace, Symbian Horizon, etc. Stores by handset manufacturers: Apple App Store, BlackBerry App World, Nokia Ovi Store, etc. Stores by mobile network operators: Vodafone 360, O2 Litmus, Orange App Shop, etc. Third-party app stores: GetJar, Mobango, PocketGear, etc. • • • In this section, we will be covering the popular application stores and providing the following details: • Available applications • Break-out of mobile applications on the basis of content categories • Break-out of mobile applications on the basis of free/paid applications Break-out Between Free and Paid Applications While paid applications have been the primary source of revenue for app stores, free applications have helped stores in attracting users. In some cases, developers make a trial or lite version of an app (with less features than the full version) that is offered free of charge. However, the full version of the application is made available for download through a one-time payment or through a micropayment feature provided inside the app – also known as an in-app payment. The figure below provides the break-out of mobile applications available in the US – from some of the leading app stores owned by smartphone vendors and OS providers – by free and paid applications. Figure 12: Break-out of Available Mobile Applications by Free and Paid Application Type – The US (In Percent, July 2010) Mobile Applications Break-out (In Percent) 100% 80% 60% 41% 71% 75% 74% 79% 25% 26% 21% BlackBerry App World Nokia Ovi Store Windows Marketplace 40% 59% 20% 29% 0% Apple App Store Google Android Market Mobile Application Store Free Applications Paid Applications Source: Distimo, August 2010 Among the US mobile applications stores by major smartphone vendors and OS providers, Google Android Market has the highest percentage of free applications available at its store. 26 © 2010, Portio Research. All Rights Reserved While paid applications have been the primary source of revenue for app stores, free applications have helped stores in attracting users.
  • Mobile Applications Futures 2010-2015 Apple App Store Apple launched its ‘App Store’ in July 2008. Highlights • • • • • Number of Applications: 250,000+ (August 2010) Free and Paid Applications in the US: 29% Free, 71% Paid (August 2010) Average Price for Paid Applications for iPhone in the US: USD 4.31 (July 2010) Number of Active Developers: 50,000 (August 2010) User Base – 120 million iOS devices (including iPhone, iPod Touch and iPad users, endAugust 2010) Application Downloads – 6.5 billion (end-August 2010) Applications are available under five major types – Books, Games, Entertainment, Education and Lifestyle. The applications such as travel, utilities, music, sports, business, news, productivity, healthcare and navigation are included under ‘Others’. Figure 13: Break–out of Available Applications by Type – Apple App Store (In Percent, August 2010) 6.2% 7.7% 11.5% 42.7% 14.6% 17.3% Books Games Entertainment Education Lifestyle Others Source: 148Apps, Portio Research Ltd. Table 3: Rank Most Popular Paid and Free Applications, Apple App Store (The US, July 2010) Paid Applications – Apple iPhone Free Applications – Apple iPhone 1 Angry Birds (Games; Price: USD 0.99) Type n Talk (Entertainment) 2 Doodle Jump (Games; Price: USD 0.99) iBooks (Books) 3 Fruit Ninja (Games; Price: USD 0.99) Jailbreaker (Games) 4 Doodle God (Games; Price: USD 0.99) Zombie Duck Hunt (Games) 5 FatBooth (Entertainment; Price: USD 0.99) Spawn Glow (Entertainment, Games) Source: Distimo, August 2010 © 2010, Portio Research. All Rights Reserved 27
  • Mobile Applications Futures 2010-2015 Google Android Market Google launched its mobile application store ‘Android Market’ in October 2008, and the store is now available in 46 countries. Android Market offers the highest percentage of free applications, with 63 percent available as free downloads worldwide; the store relies on advertisements for revenue generation. Google, unlike Apple, gives users flexibility to download Android apps from any other source, such as developers’ websites. Highlights • • • • Number of Applications: 115,000+ (August 2010) Free and Paid Applications, Worldwide: 63% Free, 37% Paid (August 2010) Average Price for Paid Applications in the US: USD 3.23 (July 2010) Number of Active Developers: 10,000 (August 2010) Application Downloads – 1 billion+ (end-August 2010) Google Android smartphones have a pre-installed application, named 'Market, which allows users to access the entire collection of Android applications via their smartphones. Revenue from apps is shared between the developer and Google in the ratio 70:30 respectively. Popular types of applications are games, multimedia, barcode scanners, location-based tools and travel guides. Figure 14: Break–out of Available Applications between Games and Non-Games – Google Android Market (In Percent, August 2010) 12.3% 87.7% Games Other Applications Source: Androlib, Portio Research Ltd. Table 4: 2010) Rank 1 2 3 4 5 Most Popular Paid and Free Applications, Google Android Market (The US, July Paid Applications Beautiful Widgets (News & Weather; Price: USD 1.82) WeatherBug Elite (News & Weather; Price: USD 1.99) MyBackup Pro (Tools, Price: USD 4.99) Documents ToGo Full Version Key (Productivity; Price: USD 14.99) PicSay Pro – Photo Editor (Multimedia; Price: USD 3.65) Free Applications Pandora Radio (Multimedia) Google Maps (Travel) T–Mobile My Account (Tools) Google Sky Map (Reference) Facebook for Android (Social) Source: Distimo, August 2010 28 © 2010, Portio Research. All Rights Reserved Android Market offers the highest percentage of free applications, with 63 percent available as free downloads worldwide; the store relies on advertisements for revenue generation.
  • Mobile Applications Futures 2010-2015 BlackBerry App World Research In Motion launched its ‘BlackBerry App World’ store in April 2009; BlackBerry App World has a presence in 65 countries and is approaching 1 million application downloads per day. BlackBerry has introduced device independent user identification, which means that a user can now manage downloaded apps under ‘My World’ or archive them on a micro SD card, so that if the user changes mobile handsets, all the previous apps can be transferred to the new handset using the user’s unique ID. Users can pay for application downloads through credit cards, operator billing and PayPal. Highlights • • • Number of Applications: 9,700+ (August 2010) Free and Paid Applications in the US: 25% Free, 75% Paid (July 2010) Average Price for Paid Applications in the US: USD 6.68 (July 2010) User Base – 20 million active users (June 2010) Application Downloads: 255 million (end-August 2010) Popular application types are themes, games, e-books, utilities and entertainment. Applications such as business, education, music, productivity, sports, finance, news, photos and videos, and travel are included under ‘Others’. Figure 15: Break–out of Available Applications by Type – BlackBerry App World (In Percent, August 2010) 15 7.0% 15.5% 4.8% 17.0% 33.3% 22.5% Themes Reference and e-books Games Utilities Music&Audio Others Source: Portio Research Ltd. Table 5: Rank Most Popular Paid and Free Applications, BlackBerry App World (US, July 2010) Paid Applications Free Applications 1 Love Football Love KAKA Animated Edition (Themes, Price: USD 2.99) BlackBerry Messenger (IM & Social Networking) 2 Animated Lightning Theme Half Price (Themes, Price: USD 2.99) Pandora (Music) 3 Juicy Girl Theme (Themes, Price: USD 3.99) Poynt (Maps & Navigation) 4 Ultra Today Plus (Productivity, Price: USD 4.99) crunchSMS (IM & Social Networking) 5 Upgrade your homescreen to Sky2 Livescreen (Theme, Price: USD 3.99) ScoreMobile for BlackBerry (Sports and Recreation) Source: Distimo, August 2010 15 Note: The percentages do not add up to 100 percent because of rounding off errors. © 2010, Portio Research. All Rights Reserved 29 BlackBerry has introduced device independent user identification, which means that a user can now manage downloaded apps under ‘My World’ or archive them on a micro SD card, so that if the user changes mobile handsets, all the previous apps can be transferred to the new handset using the user’s unique ID.
  • Mobile Applications Futures 2010-2015 Nokia Ovi Store Nokia launched its mobile application store ‘Ovi Store’ in May 2009. At end-August 2010, Ovi Store had a presence in more than 190 countries with applications available in 30 languages, and developers from 90 countries distributing their content through the store. Nokia’s strong presence in Europe and growing popularity in Asia and Latin America has helped Nokia to reach 1.7 million downloads per day. Highlights • • • Number of Applications: 9,500+ (April 2010) Free and Paid Applications in the US: 26% Free, 74% Paid (July 2010) Average Price for Paid Applications in the US: USD 2.68 (July 2010) User Base – 83 million active users (April 2010) Application Downloads – 382.5 million (end-August 2010) Applications are sold directly to users and revenue is shared between developers and Nokia. However, if operator billing is used, operators also get a share of the revenue. Applications are categorised as games (puzzles, role playing, action, arcade, etc.), audio and video (Podcasts, Videos, etc.), personalisation (Ringtones, wallpapers, etc.) and utilities (business, news, sports, etc). Figure 16: Break–out of Available Applications by Type – Nokia Ovi Store (In Percent, July 2010) 5.0% 29.0% 40.0% 20.0% 6.0% Games Audio & Video Personalisation Utilities Others Source: Portio Research Ltd. Table 6: Rank 1 2 3 Most Popular Paid and Free Applications, Nokia Ovi Store (The US, July 2010) Paid Applications Free Applications ToonWarz (Games; Price: USD 2.99) ZumZum (Games) Armageddon Squadron (Games; Price: USD 2.99) Animated Theme, Street Fever (Themes; Price: USD 2.99) TuneWiki – Lyrics with Music (Music) The Flashlight + SOS (Entertainment) 4 ShoppingList 2.1 (Utilities; Price: USD 0.99) Opera Mini Web browser (Utilities) 5 Hip Hop All Star (Games; Price: USD 0.99) Netflix Queue Manager (Entertainment) Source: Distimo, August 2010 30 © 2010, Portio Research. All Rights Reserved Nokia’s strong presence in Europe and growing popularity in Asia and Latin America has helped Nokia to reach 1.7 million downloads per day.
  • Mobile Applications Futures 2010-2015 Windows Marketplace Microsoft launched its mobile application store ‘Windows Marketplace’ in October 2009, and the store is now available in 30 countries. Windows Marketplace offers credit card and operator billing payment options to users. Users are required to create ‘Windows Live IDs’ to download or buy apps. Windows Marketplace provides a ‘No Regrets’ option to users, which allows them to return the application if they do not like it – within 24 hours of purchase – and get their money refunded as per Windows Marketplace’s mobile refund policy. Highlights • • • Number of Applications: 1,250+ (August 2010) Free and Paid Applications in the US: 21% Free and 79% Paid (July 2010) Average Price for Paid Applications in the US: USD 5.72 (July 2010) User Base – 30million+ (July 2010) Popular application types are games, tools, lifestyle, entertainment and reference. Applications such as social networking, communication, travel, books, news and weather are included under ‘Others’. Figure 17: Break-out of Available Applications by Type – Windows Marketplace (In Percent, EndAugust 2010) 16 7.3% 8.0% 6.3% 14.9% 31.1% 32.3% Games Tools LifeStyle Entertainment Reference Others Source: Portio Research Ltd. Table 7: Rank Most Popular Paid and Free Applications, Windows Marketplace (The US, July 2010) Paid Applications Free Applications 1 Meon (Games, Price: USD 2.99) Microsoft My Phone (Tools) 2 SPB Mobile Shell (Tools, Price: USD 29.99) Meon Lite (Games) 3 TouchTwit (Social Networks; Price: USD 2.99) AP Mobile (News & Weather) 4 Scrub (Communication, Price: USD 0.99) Mobile Manager for Netflix (Entertainment) 5 Reboot (Tools, Price: USD 0.99) WeatherBug (News & Weather) Source: Distimo, August 2010 16 Note: The percentages do not add up to 100 percent because of rounding off errors. © 2010, Portio Research. All Rights Reserved 31 Windows Marketplace provides a ‘No Regrets’ option to users, which allows them to return the application if they do not like it – within 24 hours of purchase – and get their money refunded as per Windows Marketplace’s mobile refund policy
  • Mobile Applications Futures 2010-2015 Comparison of Application Stores The following table provides a comparison summary of the profiled popular application stores, including: total number of available applications, split between games and nongames, split between free and paid, and average selling price for paid applications. Table 8: Comparison of Application Stores App Stores Apple App Store Google Android Market BlackBerry App World Nokia Ovi Store 17 Windows Marketplace Launch Date July 2008 October 2008 April 2009 May 2009 October 2009 Total Number of Applications (Worldwide, in August 2010) 250,000+ 115,000+ 9,700+ 9,500+ 1,250+ Percentage of Games Applications (Worldwide, August 2010) 14.6% 12.3% 15.5% 6.0% 32.3% Percentage of NonGames Applications (Worldwide, August 2010) 85.4% 87.7% 84.5 94.0% 67.7% Percentage of Free Applications (The US, July 2010) 21% 59% 25% 26% 21% Percentage of Paid Applications (The US, July 2010) 79% 41% 75% 74% 79% Average Selling Price for Paid Applications in the US (July 2010) USD 4.31 USD 3.23 USD 6.68 USD 2.68 USD 5.72 Source: Portio Research Ltd. 17 Note: The total number of applications available at the Nokia Ovi Store is over 9,500 (as of April 2010). The percentage split of applications between games and non-games is for July 2010. 32 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Chapter 4 Market Size © 2010, Portio Research. All Rights Reserved 33
  • Mobile Applications Futures 2010-2015 Market Size Forecast Methodology Mobile applications are software programs that run on handheld devices such as smartphones, feature phones or the recently introduced tablets. However, the distinction between feature phones and smartphones is the inability of feature phones to install, download or remove external applications – as they are devoid of operating systems (OS). Smartphones have operating systems and independent developers can develop mobile applications for them using a Software Development Kit (SDK) specific to that OS; feature phones sometimes have pre-installed mobile applications provided by the handset manufacturer. Therefore, we have excluded the feature phone handset user base from our study while forecasting the target market for mobile applications, as these devices do not download apps from application stores. Mobile application users are a sub-set of smartphone users and are calculated as a percentage of the worldwide smartphone user base, taking into account regional variations. Various factors – such as differences in technology evolution, availability of smartphones, user awareness, and the state of the market – affect the adoption of mobile apps, and a normalising factor has therefore been assigned to each region while estimating the mobile application user base. To further estimate mobile application downloads, data for some of the major mobile application stores – including Apple, Android, Nokia Ovi, GetJar and BlackBerry – was collected and split across various regions. Total mobile application downloads can be broadly categorised into three categories: • • • Paid-for Applications: These are apps for which download charges are borne by the consumer. Ad-funded Free Applications: These are funded by advertisers. Advertisers post ads on applications and in return pay the mobile application providers for app downloads. They come as free applications for users. Unmonetised Applications: These are provided free of charge to users, irrespective of whether the advertiser is sponsoring it or not. Therefore, a mobile application store earns revenues from either paid-for apps or through ad-funded mobile apps. Revenue for paid-for applications is calculated using the mobile application downloads data and the average selling price of the most popular apps on various application stores. The revenue model of ad-funded applications works in two ways: • • Cost per Mille (CPM): It refers to the revenue earned by the mobile application provider per 1,000 views of the advert. Cost per Action (CPA): It refers to the revenue earned by the mobile application provider when a user undertakes a specified action, such as a click or download, etc. CPM has a broader scope and includes the CPA approach as well, as it counts revenues from views. For the purpose of our study, we have determined the total ad-impressions in ad-funded downloads, and have used the CPM method to calculate revenues from adfunded mobile apps. In addition to the two revenue models described above, another model that is fast emerging is in-app payments. In-app payments are payments made by users within an application for application upgrades, virtual goods, updates, alerts, etc. There has been a surge in in-app payments because of the growing use of apps from categories such as games, social networking and music, which carry various avenues for making in-app purchases. The in-app payment function is enabled within an application with the help of an application programming interface (API), which allows developers to embed a payment platform directly within their apps. Developers implement in-app purchases in their applications using the Software Development Kit (SDK) provided by the platforms and payment enablers. The API 34 © 2010, Portio Research. All Rights Reserved Smartphones have operating systems and independent developers can develop mobile applications for them using a Software Development Kit specific to that OS.
  • Mobile Applications Futures 2010-2015 connects an application to an operator/vendor billing system for processing payments. After in-app payments are processed, the user is notified and is provided with access to the addon items purchased. In this section, we have provided the forecasts for the mobile applications market in terms of user base, application revenues, and the number of downloads from 2010 to 2015. Market Size Mobile Application User Base The mobile applications market is gaining momentum worldwide. The evolution of mobile networks and enhanced mobile handset capabilities have enabled high-speed data transfers and thus improved the user experience—resulting in a spur in mobile application downloads and use. The worldwide user base for mobile applications stood at 38.7 million at end-2009. With smartphone vendors, software developers and MNOs making huge investments to improve the quality and utility of mobile apps, the mobile applications user base is expected to grow at a CAGR of 37 percent between 2009 and 2015 to reach nearly 255.9 million by end-2015. Worldwide, the percentage of mobile users downloading mobile applications is expected to grow from 0.8 percent at end-2009 to 3.5 percent by end-2015. The figure below depicts the mobile applications user base from 2009 to 2015. Mobile Applications User Base (In Million) Figure 18: Mobile Applications User Base – Worldwide (In Million, 2009 – 2015F) 300 255.9 250 213.9 200 174.9 136.3 150 100.4 100 50 69.1 38.7 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Source: Portio Research Ltd. F – Forecasted © 2010, Portio Research. All Rights Reserved 35 Worldwide, the percentage of mobile users downloading mobile applications is expected to grow from 0.8 percent at end-2009 to 3.5 percent by end-2015.
  • Mobile Applications Futures 2010-2015 The table below highlights the growth in the number of regional mobile applications users from 2009 to 2015. Table 9: Mobile Applications User Base – Regional (In Million, 2009 – 2015F) 18 Mobile Applications User Base (In Million) Region 2009 2010F 2011F 2012F 2013F 2014F 2015F Europe 10.9 20.0 30.6 45.5 61.4 77.6 93.6 Asia Pacific 11.7 17.6 24.3 32.1 41.6 51.7 61.9 North America 14.5 28.7 41.1 52.1 61.9 68.9 76.0 Rest of World 1.6 2.8 4.4 6.6 10.0 15.7 24.4 Total 38.7 69.1 100.4 136.3 174.9 213.9 255.9 Source: Portio Research Ltd. North America had the largest regional user base of mobile applications in 2009, constituting 37.4 percent of the worldwide mobile application user base. It was followed by Asia Pacific and Europe, with 30.2 percent and 28.3 percent shares respectively. The figure below breaks out the worldwide mobile application user base in 2009 by regions. Figure 19: Worldwide Mobile Application Users – Regional Contribution (In Percent, 2009) 19 30.2% 37.4% 28.3% Europe Asia Pacific 4.2% North America Rest of World Source: Portio Research Ltd. Europe’s smartphone shipments and user base witnessed an upsurge during the first half of 2010, which is leading to a steep rise in its mobile applications’ user base. Europe is expected to outstrip North America and Asia Pacific to achieve the largest regional user base of mobile applications in the next five years. The region will have 36.6 percent of the worldwide mobile applications user base by end-2015, followed by North America with 29.7 percent. 18,19 36 Note: Sum of regional numbers may not add up to the total due to rounding off errors. © 2010, Portio Research. All Rights Reserved Europe is expected to outstrip North America and Asia Pacific to achieve the largest regional user base of mobile applications in the next five years.
  • Mobile Applications Futures 2010-2015 The figure below highlights the regional share in the worldwide mobile applications user base in 2015. Figure 20: Worldwide Mobile Application Users – Regional Contribution (In Percent, 2015F) 24.2% 29.7% 36.6% Europe 9.5% Asia Pacific North America Rest of World Source: Portio Research Ltd. F – Forecasted The worldwide mobile application user base is forecast to grow at a CAGR of 37 percent between 2009 and 2015. The ‘Rest of World’ (Latin America and AME) is expected to witness the highest percentage growth, since mobile applications user additions in this region will build on a lower existing user base compared with other regions. High growth is anticipated in all regions, as most markets aren’t expected to saturate in the next five years. Figure 21: Mobile Applications User Base Growth by Region (In Percent, 2009 – 2015F) CAGR (In Percent) 60 50 57.1 CAGR Worldwide = 37.0 % 43.0 CAGR 37.0% 40 32.0 31.8 Asia Pacific North America 30 20 10 0 Europe Rest of World Region Source: Portio Research Ltd. F – Forecasted © 2010, Portio Research. All Rights Reserved 37 High growth is anticipated in all regions, as most markets aren’t expected to saturate in the next five years
  • Mobile Applications Futures 2010-2015 In 2009, in terms of mobile application users as a percentage of the total regional mobile subscriber base, North America recorded the highest level with 4.6 percent, followed by Europe with 1.1 percent. The figure below compares the percentage of mobile applications users in the regional subscriber base at end-2009 with that at end-2015F. Figure 22: Mobile Applications Users as a Percentage of Total Regional Mobile Subscribers – Regional (In Percent, 2009 and 2015F) 18.7 Mobile Applications Users' Contribution (In Percent) 20 15 10 7.8 4.6 5 1.1 1.6 0.5 0.1 1.3 0 Europe Asia Pacific North America Rest of World Region 2009 2015F Source: Portio Research Ltd. F – Forecasted Mobile Application Downloads The increasing number of mobile application downloads reflects the growing uptake of mobile application services. The number of downloads is expected to increase at a CAGR of 53.2 percent in the period between 2009 and 2015, and this is depicted in the figure below. Mobile Application Downloads (In Billion) Figure 23: Mobile Application Downloads – Worldwide (In Billion, 2009 – 2015F) 37.6 40 35 29.6 30 22.6 25 20 16.3 15 11.1 10 5 6.7 2.9 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Source: Portio Research Ltd. F – Forecasted The next table shows the regional contribution in mobile application downloads over the 2009-2015 period. 38 © 2010, Portio Research. All Rights Reserved The number of downloads is expected to increase at a CAGR of 53.2 percent in the period between 2009 and 2015.
  • Mobile Applications Futures 2010-2015 Table 10: Mobile Application Downloads – Regional (In Million, 2009 – 2015F) 20 Mobile Application Downloads (In Million) Region 2009 2010F 2011F 2012F 2013F 2014F 2015F Europe 819 1,593 2,326 3,280 4,476 6,328 8,460 Asia Pacific 853 1,989 3,406 5,381 7,938 10,944 14,233 North America 1,165 3,033 4,918 6,523 8,393 10,209 11,931 Rest of World 79 118 476 1,143 1,751 2,134 2,991 Total 2,915 6,733 11,125 16,327 22,557 29,616 37,615 Source: Portio Research Ltd. In 2009, North America contributed 40 percent of the total mobile application downloads. It was followed by Asia Pacific and Europe amassing 29.2 percent and 28.1 percent respectively. In 2015, Asia Pacific is expected to overtake North America in download-terms, contributing 37.8 percent to the worldwide total, while North America will be accounting for 31.7 percent, followed by Europe with 22.5 percent. The contribution from Rest of World will increase slowly from 2.7 percent in 2009 to 8 percent in 2015. Mobile Application Revenues – Application Sales, Advertisements and In-app Payments Mobile applications are helping handset manufacturers to increase their market share, brand loyalty and revenues. Traditionally, handset and accessory sales have accounted for the dominant share in handset manufacturers’ revenues. However, with the emergence of the mobile app market, a new revenue stream has emerged for smartphone vendors. Apps are also helping MNOs to increase their revenues, especially data revenues, and are providing a new growing market for software developers. The figure on the next page provides the revenue forecasts for mobile applications accounting for mobile application sales, embedded advertisements and in-app payments. 20 Note: Sum of regional numbers may not add up to the total due to rounding off errors. © 2010, Portio Research. All Rights Reserved 39 In 2015, Asia Pacific is expected to overtake North America in download-terms, contributing 37.8 percent to the worldwide total.
  • Mobile Applications Futures 2010-2015 Figure 24: Mobile Applications Revenue – Worldwide (In USD Billion, End 2009 – End 2014F) Revenue (In USD BIllion) 25 23.3 19.4 20 16.0 15 12.6 8.8 9.5 10 6.6 5 3.1 2009 0 6.8 5.0 3.5 3.6 2.0 1.6 2010F 12.8 10.7 7.2 8.7 4.5 5.8 2011F 2012F 2013F 2014F 10.5 2015F Year Mobile Application Sales and Advertisement Revenues In-app Payment Revenue Source: Portio Research Ltd. F – Forecasted Mobile Applications Revenues – Sales and Advertisements Figure 25: Mobile Applications Sales and Advertisement Revenues – Worldwide (In USD Billion, 2009 – 2015F) 12 10.5 Revenue (In USD BIllion) 10 8.7 7.2 8 5.8 6 4.5 3.1 4 2 1.6 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Source: Portio Research Ltd. F – Forecasted 40 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 The table below highlights the growth of regional mobile applications sales and advertisement revenues from 2009 to 2015. Table 11: Mobile Applications Sales and Advertisement Revenues – Regional (In Billion, 2009 – 2015F) 21 Mobile Applications Sales and Advertisement Revenues (In Billion) Region 2009 2010F 2011F 2012F 2013F 2014F 2015F Europe 0.46 0.92 1.37 1.92 2.52 3.21 3.96 Asia Pacific 0.44 0.74 0.94 1.17 1.42 1.86 2.35 North America 0.63 1.41 1.98 2.33 2.66 3.00 3.32 Rest of World 0.04 0.05 0.19 0.41 0.56 0.63 0.83 Total 1.57 3.12 4.49 5.82 7.16 8.69 10.47 Source: Portio Research Ltd. In 2009, North America had the highest revenue share (39.9 percent) of worldwide mobile application sales and embedded advertisements, followed by Europe (29.2 percent) and Asia Pacific (28.1 percent). The figure below shows the regional share of worldwide mobile application sales and advertisement revenues in 2009. Figure 26: Worldwide Mobile Applications Sales and Advertisement Revenues – Regional Contribution (In Percent, 2009) 22 28.1% 39.9% 29.2% Europe Asia Pacific 2.7% North America Rest of World Source: Portio Research Ltd. Europe is expected to overtake North America in this respect by end-2015, when it will account for 37.9 percent of the worldwide mobile application revenue (excluding in-app payments), against 31.7 percent for North America and 22.5 percent for Asia Pacific. The next figure highlights the regional share of worldwide mobile application sales and advertisement revenues in 2015. 21 22 Note: Sum of regional numbers may not add up to the total due to rounding off errors. Note: The percentages do not add up to 100 percent because of rounding off errors. © 2010, Portio Research. All Rights Reserved 41
  • Mobile Applications Futures 2010-2015 Figure 27: Worldwide Mobile Applications Sales and Advertisement Revenues – Regional Contribution (In Percent, 2015F) 22.5% 31.7% 37.9% Europe 7.9% Asia Pacific North America Rest of World Source: Portio Research Ltd. F – Forecasted Worldwide mobile application revenues, excluding in-app payments, are forecast to grow at a CAGR of 37.2 percent between 2009 and 2015, and all regions are expected to record impressive CAGRs. Mobile handset manufacturers, software developers and MNOs have identified the potential in the mobile application market and are aggressively promoting their mobile applications among consumers. In recent times, all major smartphone vendors, OS providers and MNOs have launched app stores either individually or in collaborations, and are also working with payment enablers to ensure secure and user-friendly payment systems. Figure 28: Growth of Mobile Applications Sales and Advertisement Revenues by Region (In Percent, 2009 – 2015F) CAGR (In Percent) 80 CAGR Worldwide = 37.2% 64.0 60 CAGR 37.2% 43.2 40 32.2 32.0 20 0 Asia Pacific Europe North America Rest of World Region Source: Portio Research Ltd. F – Forecasted 42 © 2010, Portio Research. All Rights Reserved Worldwide mobile application revenues, excluding in-app payments, are forecast to grow at a CAGR of 37.2 percent between 2009 and 2015, and all regions are expected to record impressive CAGRs.
  • Mobile Applications Futures 2010-2015 In-app Payment Revenues In-app payments are made by users to migrate from a free (or lite) version of an app to the full premium paid-for version of the app, or to access additional features or content to enhance the user experience of a particular application. With in-app payment feature options available within an application, users can make payments without having to go through a separate payment site, thus ensuring a seamless application experience. Moreover, multiplatform application developers are collaborating with payment enablers to make payments possible across mobile platforms. Enhanced user experiences, combined with the growing awareness and uptake of mobile applications among users, will result in the continuous growth of in-app payment revenues over the next five years. Mobile In-app Payment Revenue (In USD BIllion) Figure 29: In-app Payment Revenues – Worldwide (In USD Billion, 2009 – 2015F) 14 12.8 12 10.7 10 8.8 8 6.8 5.0 6 3.5 4 2.0 2 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Source: Portio Research Ltd. F – Forecasted In 2009, mobile game applications accounted for a major chunk (44.6 percent) of worldwide mobile in-app payment revenues, followed by mobile social networking applications (33.3 percent) and other mobile applications (22.1 percent). Figure 30: Break-out of In-app Payment Revenues by Type – Worldwide (In Percent, 2009) 33.3% 22.1% 44.6% Gaming Social Networking Others Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 43 In 2009, mobile game applications accounted for a major chunk (44.6 percent) of worldwide mobile in-app payment revenues.
  • Mobile Applications Futures 2010-2015 Mobile gaming applications will remain the largest contributor (43.8 percent) to mobile in-app payment revenues in 2015, followed by social networking applications (32.9 percent). Other applications are forecast to account for 23.2 percent of in-app payment revenues, with the majority of this expected to come from navigation maps, e-books and mobile payment apps. Figure 31: Break-out of In-app Payment Revenues by Type – Worldwide (In Percent, 2015F) 23 32.9% 23.2% 43.8% Gaming Social Networking Others Source: Portio Research Ltd. F – Forecasted 23 Note: The percentages do not add up to 100 percent because of rounding off errors. 44 © 2010, Portio Research. All Rights Reserved Mobile gaming applications will remain the largest contributor (43.8 percent) to mobile in-app payment revenues in 2015, followed by social networking applications (32.9 percent)
  • Mobile Applications Futures 2010-2015 Chapter 5 Regional Trends © 2010, Portio Research. All Rights Reserved 45
  • Mobile Applications Futures 2010-2015 Regional Trends The mobile applications market has grown at a tremendous pace during the past couple of years. While developed markets, with their high smartphone penetrations and affinity for video and gaming applications, have understandably embraced mobile apps more extensively, emerging markets also look promising. The introduction of mobile apps for Web-based services such as Facebook and Twitter, which have worldwide appeal, has drawn new users to sample mobile applications; this has opened doors and mobile apps are now penetrating into emerging markets as well. Besides world-renowned apps with global appeal, localised applications are also gaining popularity. Application stores, especially MNO-owned stores, are focussing on developing apps targeting users in their markets of operation. Smartphones have been a key contributor to the growth of the mobile applications market, and hence the regional growth of smartphone users will play a major role in the growth of the mobile apps market in a specific region. The table below forecasts smartphone users at a regional level. Table 12: Smartphone Users – Regional (In Million, 2009 – 2015F) 24 Mobile Subscribers (In Million) Region 2009 2010F 2011F 2012F 2013F 2014F 2015F Europe 81.9 123.7 168.7 225.9 278.4 324.3 363.9 Asia Pacific 115.5 155.4 193.7 239.9 295.2 353.4 411.4 North America 78.7 117.3 145.4 166.9 184.3 199.6 214.3 Rest of World 26.3 39.6 53.9 72.3 95.7 132.7 181.1 Total 302.4 436.0 561.7 705.0 853.6 1,010.0 1,170.6 Source: Portio Research Ltd. Apart from smartphones, mobile broadband is also expected to be a major facilitator in the growth of mobile application markets, as enhanced data rates lead to better user experiences. The next section lists the key drivers and inhibitors for the growth of the mobile applications market, and provides a snapshot of two leading mobile app markets—the US and the UK. 24 Note: Sum of regional numbers may not equal total due to rounding off errors. 46 © 2010, Portio Research. All Rights Reserved Application stores, especially MNO-owned stores, are focusing on developing apps targeting users in their markets of operation
  • Mobile Applications Futures 2010-2015 Drivers and Inhibitors Drivers Figure 32: Drivers of Mobile Applications Proliferation of mobile broadband • With the increasing uptake of mobile broadband, consumers are fast adopting new content services and applications. This includes the download and use of mobile applications. • Flat fee tariff schemes offered by operators are encouraging consumers to experiment with the different mobile apps available without increasing user costs Smartphones catalysing growth • Smartphones underpin the mobile applications market. These devices, packaged with affordable mobile broadband packages in developed markets, are facilitating the uptake of mobile applications. Arrival of high speed internet services • With the arrival of WiMAX and LTE in certain countries (E.g. the US, the UK and Japan) mobile applications will receive a definite boost. The high data traffic rate offered by WiMAX and LTE, of 70 Mbps and 100 Mbps respectively, and the better Quality of Service (QoS) given by these advanced networks will deliver high user experiences for mobile application users. Increasing awareness • Awareness about mobile applications has increased, and consumers are appreciating their utility in everyday activities – not just entertainment. • Mobile applications for mobile banking, booking tickets, video services, navigation and mobile maps, etc., are attracting users as these applications support the realities of daily life. Increased competition among the application stores • With the increasing numbers of competitors in the mobile applications market, the average selling price for applications is going down and new business models are being developed to benefit users. This increases the demand for applications, which in turn further increases the application supply, and competitive pricing. Usage of feature rich APIs by the operators • The emergence of sophisticated device-level and network-level APIs provide application developers with access to device and network-level functionalities. This leads to the introduction of more elaborate and compelling applications that will attract more consumers. Advertising as revenue source • Applications are being used as tools for targeting mobile application users through ad placements within the applications. • Advertisement revenues allow app store owners to monetize popular applications available free of charge. Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 47
  • Mobile Applications Futures 2010-2015 Inhibitors Figure 33: Inhibitors of Mobile Applications Pace of network enhancements unable to keep up with the evolution of mobile applications • Network shortcomings, that include restricted mobile broadband coverage, impact the Quality of Service (QoS) and thus the overall mobile user experience. This disrupts the uniform consumer experience of using mobile applications. • Advancements in mobile applications are putting pressure on network bandwidth and speeds, particularly for online gaming and video services. Inadequate or untimely network upgrades are a major impediment in the growth of mobile applications. For example, AT&T had to prohibit the Sling Player mobile application (the application redirects TV signals over the Internet to handsets) over its 3G network due to bandwidth issues. However, when the developer restricted the bandwidth usage of the application, it was allowed back on the network. Lack of awareness of smartphone capabilities • Many consumers buy smartphones out of the novelty factor and are unaware of device features and the availability of mobile applications that can be used on their devices. Unsuitability of billing/payment options • Users’ aversion to online payments and the lack of mobile payment options for teens and tweens, which are key market segments with high mobile applications usage, inhibits the growth of paid applications. • The proliferation of mobile applications in developing countries will be a challenge. Lack of Interoperability • A significant number of mobile applications are specific to certain operating systems. Users have to download applications customised to the operating systems of their devices, and are restricted from transferring the downloaded applications to other devices with different operating systems. In general, if a user changes his/her devices, the applications need to be downloaded again on the new device. Source: Portio Research Ltd. 48 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Table 13: Regional Drivers – An Overview 25 Regional Drivers – An Overview North America • High penetration of mobile broadband and deployment of LTE/WiMAX networks • High smartphone penetration and flat-fee data plans • Awareness about mobile applications in the mature, tech-savvy market • Emerging market for mobile applications for the enterprise segment Latin America • Popularity of social networking • Migration towards highspeed networks • Favourable population demographics with techsavvy youth segment Europe • High smartphone penetration and prevalence of flat-rate data plans • Popularity of mobile video and gaming services • Ongoing progress in the direction of 3.5G and 4G networks • Increasing popularity of MNO and third-party owned application stores Africa & Middle East • Proactive network upgrades • Applications such as Facebook and Twitter are generating user interest in mobile applications (in May 2010, Facebook subscribers in the Middle East and North Africa exceeded the number of newspapers being circulated) • Emergence of utility-based and mobile payment applications Japan & Korea • Tech savvy subscriber base • High smartphone and mobile broadband penetration • Localised content India and China • Popularity of social networking • Ongoing deployment of 3G networks; smartphone sales picking up • Favourable population demographics with a sizable youth segment Source: Portio Research Ltd. 25 Source: http://social-networking-tagging.suite101.com/article.cfm/social-networking-surges-in-middle-east © 2010, Portio Research. All Rights Reserved 49
  • Mobile Applications Futures 2010-2015 Profiles of the US and UK Markets Criteria for Selecting these Markets The US and the UK have some of the highest levels of smartphone penetration and mobile broadband adoption. These markets have been riding on booming smartphone sales in the last couple of years (especially after the launch of the Apple iPhone in June 2007), and there have been aggressive efforts by MNOs in these markets to move to high-speed networks to accommodate burgeoning user demand for data services. At end-2009, the UK had over 17.1 million mobile broadband subscribers, while the US had 69.5 million, accounting for nearly 21.8 percent and 24.1 percent of mobile subscribers in both regions respectively. With significant proportions of the subscriber base in these markets using mobile broadband, and a growing percentage of these subscribers accessing mobile applications, these markets have reached a critical mass of mobile app users. This critical mass of users has opened new avenues for the growth of mobile applications. Application providers can now look to effectively monetise free applications through advertisements and in-app payments. It will also open doors for new applications in niche categories, such as Healthcare, Lifestyle and Finance. This creates new opportunities for content developers to reach the price-sensitive segment. Mobile Application Downloads (In Million) Figure 34: Mobile Application Downloads – Top 3 Countries (In Million, 2009) 2,000 1,684 1,600 1,200 800 400 201 151 UK France 0 US Countries Source: Portio Research Ltd. 50 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 The US The US has pioneered the adoption of mobile applications. With more than 1,684 million downloads at end-2009, the US is the key market for incumbent players such as Apple and Google. The US accounts for more than 50 percent of Apple’s iPhone and iPod Touch user base. 26 With declining voice revenues, operators in the US are undertaking initiatives to push data services to earn additional revenues. Such initiatives include the deployment of 3G and 4G networks, reduced prices of data-packages, and enhanced quality-of-service. The growing presence of such enablers is making the US an optimum market for mobile application service providers. The US accounts for more than 50 percent of Apple’s iPhone and iPod Touch user base Popular Mobile App Stores Apple App Store: Apple App Store is the most popular application store in the US, owing to a substantial installed base of iPhone, iPad and iPod Touch devices. Games are the most popular app type at Apple App Store in the US, followed by Entertainment, Social Networking and Utilities. This is in-sync with the brand positioning of iPhone, which is more popular in the consumer market. Table 14: Most Popular Paid and Free Applications – Apple App Store (The US, July 2010) Rank Paid Applications – Apple iPhone Free Applications – Apple iPhone 1 Angry Birds (Games; Price: USD 0.99) Type n Talk (Entertainment) 2 Doodle Jump (Games; Price: USD 0.99) iBooks (Books) 3 Fruit Ninja (Games; Price: USD 0.99) Jailbreaker (Games) 4 Doodle God (Games; Price: USD 0.99) Zombie Duck Hunt (Games) 5 FatBooth (Entertainment; Price: USD 0.99) Spawn Glow – Free (Entertainment, Games) Source: Distimo, August 2010 Google Android Market: Google Android Market is considered to be one of the biggest competitors to Apple App Store. Undertaking an aggressive growth strategy, Google Android is pushing more devices into the market and had launched more than 70,000 applications as of end-June 2010. The US accounts for 65 percent of Google Android’s developers, making it the biggest and key market. 27 Functionality is the core value proposition of Google Android’s phones, which gets reflected in the popular apps sold through the Android App store. News and Weather, Tools and Productivity are the most popular application types on the store. 26 27 Source: http://metrics.admob.com/wp-content/uploads/2009/12/AdMob-Mobile-Metrics-Nov-09.pdf Source: Distimo, December 2009 © 2010, Portio Research. All Rights Reserved 51 The US accounts for 65 percent of Google Android’s developers, making it the biggest and key market.
  • Mobile Applications Futures 2010-2015 Table 15: Most Popular Paid and Free Applications – Google Android Market (The US, July 2010) Rank 1 2 Paid Applications Free Applications Beautiful Widgets (News & Weather; Price: USD 1.82) WeatherBug Elite (News & Weather; Price: USD 1.99) Pandora Radio (Multimedia) Google Maps (Travel) 3 MyBackup Pro (Tools, Price: USD 4.99) T–Mobile My Account (Tools) 4 Documents ToGo Full Version Key (Productivity; Price: USD 14.99) Google Sky Map (Reference) 5 PicSay Pro – Photo Editor (Multimedia; Price: USD 3.65) Facebook for Android (Social) Source: Distimo, August 2010. BlackBerry App World: RIM is the third largest smartphone OS supplier in the US and is the most popular handset manufacturer in the enterprise segment. 28 Utility and Productivity are the most popular application types on App World, followed by Entertainment, Social Networking, Navigation, etc. Table 16: Most Popular Paid and Free Applications – BlackBerry App World (The US, July 2010) Rank Paid Applications Free Applications 1 Love Football Love KAKA Animated Edition (Themes, Price: USD 2.99) BlackBerry Networking) 2 Animated Lightning Theme Half Price (Themes, Price: USD 2.99) Pandora (Music) 3 Juicy Girl Theme (Themes, Price: USD 3.99) Poynt (Maps & Navigation) 4 Ultra Today Plus (Productivity, Price: USD 4.99) crunchSMS (IM & Social Networking) 5 Upgrade your homescreen to Livescreen (Theme, Price: USD 3.99) ScoreMobile Recreation) Utility and Productivity are the most popular application types on App World, followed by Entertainment, Social Networking, Navigation, etc. Sky2 Messenger for (IM BlackBerry & (Sports Social and Source: Distimo, August 2010 Windows Marketplace for Mobile: The US accounts for the largest number of Windows applications (a total of 639), followed by other regions such as the UK, Australia and Canada. 29 Popular mobile application types include Communication, Games, Tools and Productivity, etc. 28 29 Source: http://metrics.admob.com/wp-content/uploads/2009/12/AdMob-Mobile-Metrics-Nov-09.pdf Source: Distimo, December 2009 52 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Table 17: Most Popular Paid and Free Applications – Windows Marketplace (The US, July 2010) Rank Paid Applications Free Applications 1 Meon (Games, Price: USD 2.99) Microsoft My Phone (Tools) 2 SPB Mobile Shell (Tools, Price: USD 29.99) Meon Lite (Games) 3 TouchTwit (Social Networks; Price: USD 2.99) AP Mobile (News & Weather) 4 Scrub (Communication, Price: USD 0.99) Mobile Manager for Netflix (Entertainment) 5 Reboot (Tools, Price: USD 0.99) WeatherBug (News & Weather) Source: Distimo, August 2010 The UK The UK recorded nearly 201.0 million downloads of mobile applications at end-2009. It is the second largest market for Apple with close to 8 percent of its Apple iPhone and iPod Touch user base located in this region. Mobile apps usage in the UK is expected to rise in the near future with growing consumer demand. Even the UK Government recently launched a website – Data.gov.uk – which provides information related to app development for mobile app developers. 30 Such initiatives will further bolster the growth of mobile apps in the UK. Popular Mobile Applications Stores Apple App Store: Apple’s iPhone OS has the largest market share in the UK accounting for almost three quarters of the market. 31 Consequently, Apple App Store is the most popular app store in the UK. The most popular app types include Games, Social Networking, Navigation, etc. Apple’s iPhone OS has the largest market share in the UK accounting for almost three quarters of the market Table 18: Most Popular Paid and Free Applications – Apple App Store (The UK, August 2009) Paid Applications 32 Free Applications 1 Camera Genius (Photography, Utility, Price: USD 0.98) Sky Sports Live Football Score Centre (Sports) 2 Moto X Mayhem (Games, Price: USD 0.98) Waterslide Extreme (Games) 3 Flight Control (Games, Price: USD 0.98) Tube Map (Maps and Navigation) 4 Ragdoll Blaster (Games, Price: USD 1.97) Sheep Launcher (Games) 5 Minigore (Games, Price: USD 0.98) Facebook (Social Networking) Rank Source: Distimo, August 2009 Google Android Market: The UK is another key market for Google Android. Almost 12 percent of its developers are located in the UK, allowing them to provide localised content for the UK market. 33 The most popular application types on Android’s UK app store are Tools and Productivity, followed by Weather, Social Networking, Entertainment, etc. 30 Source: http://www.itnewsafrica.com/?p=5788 Source: http://metrics.admob.com/wp-content/uploads/2009/12/AdMob-Mobile-Metrics-Nov-09.pdf 32 Note: Prices have been converted from British Pounds to US Dollars using the exchange rate of GBP 1 = USD 1.66 33 Source: Distimo, December 2009 31 © 2010, Portio Research. All Rights Reserved 53
  • Mobile Applications Futures 2010-2015 Table 19: Most Popular Paid and Free Applications – Google Android Market (The UK, August 2009) Rank Paid Applications Free Applications 1 Power Manager Full (Tools and Productivity, Price: USD 0.99) The Weather Channel (News & Weather) 2 Advanced Task Manager (Tools and Productivity, Price: USD 0.99) MySpace Mobile (Social Networking) 3 MyBackup Pro (Tools and Utility, Price: USD 4.99) Google Search by Voice (Tools and Productivity) 4 CoPilot Live Navigation 34 (Maps and Navigation, Price : USD 37.5) Backgrounds (Entertainment) 5 Weather Widget – Donate (News & Weather, Price: USD 1.49) beebPlayer (Entertainment & Video) Source: Distimo, August 2009 Symbian Horizon: Symbian is the third largest smartphone OS provider in the UK. Rather than a stand-alone app store, Symbian Horizon acts as a facilitator and provides applications through other stores, such as Nokia Ovi, or through app developers themselves. The most popular app types on the store include Tools, Utilities, Productivity and Social Networking. Table 20: Most Popular Paid and Free Applications – Symbian Horizon (Worldwide, July 2010) Rank Paid Applications Free Applications 1 Raviteq Collage (Entertainment, Price: USD 2.58) Kero Mobile (Entertainment, Games, News, etc.) 2 Currencies (Tools and Utilities, Price: USD 6.99) Wikipedia (Tools and Utilities) 3 Ex'Ecot (Tools and Utilities, Price: NA) HandyWi (Tools and Productivity) 4 Fleatch Presence Service (Tools and Utilities, Price: USD 1.29) fring (Social Networking) 5 BTMassStorage (Tools and Utilities, Price: USD 1.29) Mobbler (Music and Audio) Source: Symbian Horizon Website Vodafone 360: Vodafone is one of the leading mobile operators in the UK, with a mobile subscriber base of 18.9 million subscribers at end June-2010. Of its total subscriber base, nearly 41 percent are 3G subscribers - which form a substantial prospective customer base for mobile applications. 34 Note: Prices have been converted from British Pounds to US Dollars using the exchange rate of GBP 1 = USD 1.66 54 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Table 21: Most Popular Applications Paid and Free – Vodafone 360 (The UK, July 2010) Rank Paid Applications Free Applications 1 Navigation Find & Go (Navigation, Price: USD 7.62 per month) Facebook (Social Networking) 2 Music (Music, Price: USD 7.62 per month) BBC News (News) 3 Maps (Navigation, Price: NA) YouTube (Entertainment and Video) 4 Mobile TV Packs (Entertainment, Price: USD 4.57 per month) Qik (Entertainment and Social Networking) 5 Entertainment and fun alerts (Entertainment, Price: USD 0.18 per alert) Foursquare (Games and Social Networking) Source: Vodafone 360 App Store Website, July 2010 Other than the aforementioned stores, GetJar is also attracting users’ attention and has achieved a significant share in the non-Apple mobile applications market. With more than one billion downloads worldwide since launch and more than 65,000 applications available on its app store, GetJar is offering a wide range of apps and choice to its consumer base. In June 2010, the company received funding of USD 11 million, which will enable it to compete more aggressively against other application stores. 35 35 Source: http://econsultancy.com/blog/6135-getjar-secures-11m-funding-for-its-app-store © 2010, Portio Research. All Rights Reserved 55
  • Mobile Applications Futures 2010-2015 Chapter 6 Value Chain 56 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Value Chain The mobile applications ecosystem comprises platform developers, application developers, aggregators, mobile operators, smartphone vendors and application store owners. The following figure explains the generic value chain of the mobile applications market. Figure 35: Basic Value Chain of the Mobile Applications Market Applications OEM Platform Providers Application Developers Aggregators App Stores Consumers Revenue Flow Source: Portio Research Ltd. The value chain consists of the following stakeholders: • • • • OEM Platform Providers – They provide the development platform and programming environment to the application developers. OEM Platform Providers do not get any direct revenue share from application sales, but their arrangement with developers helps them build a large application base. Developers are also benefitted from this arrangement as they gain direct access to the OEM’s customer base. OEM Platform Providers can be categorised into the following two segments:  Hardware and Software Services – Companies such as Apple, Microsoft and Google provide developers with hardware and software services.  Smartphone Vendors – Companies such as Sony Ericsson, Samsung and Nokia provide developers with programmatic access to device assets. Application Developers – These individuals or companies develop applications for multiple operating systems, platforms and devices across different application categories. Developers receive up to 70 percent of the revenues from application sales (net amount after the deduction of taxes and billing charges) depending upon their agreement with application store owners. Aggregators – They offer a common platform to both developers and users to respectively upload and download mobile apps that are compatible with different devices. They also simplify users’ search for apps by limiting their need to contact different application stores and mobile operators. They further facilitate billing mechanisms for smartphone vendors and application store owners, and provide payment solutions to users to purchase mobile content and apps. Aggregators act as a channel between mobile operators and developers; in case operators do not wish to invest their time in managing the content or the application developers. Popular mobile aggregators are GetJar, Handmark and PocketGear. Application Stores – These are online or mobile marketplaces for end consumers to purchase mobile applications. Users can check the applications available in the store, © 2010, Portio Research. All Rights Reserved 57
  • Mobile Applications Futures 2010-2015 demo these apps on their mobile phones, and download them for free or by paying a certain fee. The three types of app stores are mentioned below:  Device/OS-centric Stores – These app stores are built by device and operating system (OS) vendors, and offer applications which can only run on their respective devices. OS vendor stores include Apple’s App Store, Microsoft’s Windows Marketplace, Google’s Android Market, Symbian Horizon, and RIM’s Blackberry App World; and device vendor stores include Nokia’s Ovi Store, Samsung’s Samsung Apps and Sony Ericsson’s PlayNow Arena. The device/OS vendor stores partner with developers for developing applications for their specific devices. These stores provide direct payment options to users and allow them to pay with credit cards when downloading paid applications. Revenues from application sales are shared between developers and store owners in the ratio of 70:30 respectively (as in the case of Apple’s App Store). Device/OS vendor stores, except for Apple, also provide an option of payment via operator billing. In this case, MNOs receive a share of 3040 percent from app sales, which in turn reduces the developer’s share.  Operator Stores – MNOs including Vodafone (Vodafone 360), O2 (O2 Litmus) and Orange (Orange App Store) have entered the apps market to offer a complete package of services and build stronger relationships with their customers, and therefore avoid becoming ‘dumb pipes’. MNOs partner with application developers for application development. As operators have direct relationships with mobile customers, it allows them to offer personalised services to a large customer base.  Third–Party/White Label Stores – These are stores operated by third-party providers such as GetJar, PocketGear, Handmark and Mobango. They are crossplatform application stores and offer apps to users across a wide range of devices and operating systems. White label stores do not own the hosted applications and are operated by a third-party under the client’s brand name. For example, Sprint has outsourced designing, hosting and operational services of their application store to third-party store ‘Handmark’. 58 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Chapter 7 Business Models © 2010, Portio Research. All Rights Reserved 59
  • Mobile Applications Futures 2010-2015 Business Models Market players including operating system providers, application developers, aggregators, application stores, smartphone vendors, mobile operators and billing enablers collaborate with each other to offer mobile content and applications to mobile users. Revenues are generated from application sales and adverts. Users can be charged in the following ways: • Trial Version – The trial versions of apps – with limited functionality and content – are made available to consumers. A consumer can trial an app by paying a small charge before buying the full version. This helps developers, store owners, mobile operators and smartphone vendors to promote their apps and reach a large customer base. • Pay-Per-Download – A user is charged a fixed amount of money for downloading an app. The application’s price is decided by the developer or store owner. Pay-PerDownload is the most popular model; the user gets access to the full version of the app after the download is complete. • In-application Payments – Here, the lite version of the application is available for free or at small charge, but consumers are charged through the in-app payment feature, for any add-on content they require, such as digital assets and gaming goods. • Subscription  Account Activation – The application’s content is free but users are charged a registration fee to get the login credentials for the application’s account. One example is the ‘Wall Street Journal Mobile Reader’, which requires users to purchase the login information to access the latest news on their phones.  Timed-Subscription – The Washington Post employs a timed-subscription model, under which the user is charged USD 1.99 to access the paper contents for 12 months. The user is then required to pay USD 1.99 for the renewal of the subscription after a year 36. A user can make payments through credit cards, PayPal gateways or operator/carrier billing. The way in which revenues generated from app sales are divided between the app stores, developers, aggregators and mobile operators depends upon the business model used. Adverts are another source of revenue – advertisers are charged for the placement of advertisements within mobile applications or on mobile Web browsers. The following three business models are prevalent in the mobile applications market: • App-centric Model • Operator-centric Model • Blend of App-centric and Operator-centric Model These models are briefly discussed over the coming pages. 36 Source: http://www.readwriteweb.com/archives/washington_post_offers_subscription_model_app_for.php 60 © 2010, Portio Research. All Rights Reserved The way in which revenues generated from app sales are divided between the app stores, developers, aggregators and mobile operators depends upon the business model used.
  • Mobile Applications Futures 2010-2015 App-centric Model Application stores from the likes of Apple, Palm and RIM define the App-centric model, as they bypass mobile operators and collect revenues from users for application downloads; these revenues are then divided between developers and application stores generally in the ratio of 70:30. These stores invite developers and provide them with tools and resources to develop OS and device specific applications across numerous application categories. Apple offers integrated billing to users through i-Tune accounts, while others involve billing enablers in their value chain, whom they pay a minimal fee for billing and hosting services. The App-centric model is an attractive opportunity for developers since they receive a major share of the revenues from application sales. The figure below explains the App-centric business model. Figure 36: App-centric Business Model Application Development Tools OS/OEM Platforms Application Developers Application Revenue App Stores Application Consumers Revenue Billing Enabler Source: Portio Research Ltd. Vendors such as RIM have already introduced operator billing as a payment option in a few markets. This will help players to reach mobile users without credit cards, or those hesitant to use their credit cards for such app transactions. © 2010, Portio Research. All Rights Reserved 61 The App-centric model is an attractive opportunity for developers since they receive a major share of the revenues from application sales.
  • Mobile Applications Futures 2010-2015 SWOT Analysis – App-centric Model Figure 37: SWOT Analysis – App-centric Business Model Strengths Weaknesses • App stores offer a wide choice of applications to users across different application categories. Moreover, these apps are designed to suit the device OS, offering better user experiences. • Applications downloaded from these app stores can only run on targeted smartphones with that specific OS. • App stores give developers the hardware and software services that reduce app development time. Moreover, as developers are creating for a specific single OS platform, they do not have to develop and test apps on multiple platforms and devices. • Apple, for example, does not allow users to download apps from any other source other than the Apple App Store. • In Apple’s case, a user is required to have either an i-Tune account, PayPal or credit card to make a payment for paid application downloads. • Except in the case of BlackBerry, if users change their mobile devices, they are required to download all applications again. Opportunities Threats • Application developers have complete knowledge and access to the OS, the device interface and assets. This helps developers in creating customised applications according to the smartphone OS and features, such as display and screen size, etc., for enhanced user experience. • Hackers are developing and uploading fake apps on to Apple’s App Store to access users’ iTunes accounts. They then use the account to download paid applications. • App stores are now focusing on niche application categories. For example, Apple iPhone is perceived to be a game-centric phone, but books recently outnumbered games on Apple’s App Store. • Growing competition is bringing down the price of paid apps and this is eroding the revenue advantage that developers derive from the App-centric model. Lower prices reduce developers’ profits and could lead to poor quality apps. Moreover, with lower incentives per app, developers might be hesitant to experiment and innovate new apps – as noted before, stores require a continuous supply of new apps to be successful. Source: Portio Research Ltd. 62 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Operator-centric Model The operator-centric model gives greater importance to mobile operators because of the integrated billing provided by them for the payment of mobile apps through their networks. The following figure explains the Operator-centric business model. Figure 38: Operator-centric Business Model Application Development OS/OEM Platforms Tools Application Application Developers Application Aggregators Mobile Operators Consumers Revenue Source: Portio Research Ltd. Mobile operators, such as Vodafone, China Mobile and Orange follow this model where they themselves provide billing to their users. Operators invite application developers directly or through application stores, to develop apps for their users that are launched through their stores. With the benefit of having direct contact with users, operators guide the development of apps on the basis of user needs and behavior. Thereafter, these apps can run on a variety of handsets with different OS platforms. In addition, there are other stores (vendor stores or third-party stores) that may provide the option of operator-billing, to allow mobile users to download and pay for mobile apps via their mobile operator. In this case, mobile operators provide the network data access and also act as billing enablers to complete the applications purchase, and in turn demand a share of the application revenue. Operator Billing Mobile operator stores, such as Vodafone 360 and China Mobile Mobile Market, are owned by the mobile operators directly and they themselves provide billing to users. Thus, they offer higher incentives to developers, to be able to attract more developers who will develop a wider range of applications for their users. Vodafone 360 and China Mobile’s Mobile Market offer revenue shares as high as 70 percent to developers, to compete with app store giants and established players, such as Apple. However, in cases where vendor stores or third-party application stores use the operator billing mechanism, users download apps and the payment for this is either added to their monthly mobile bill or is deducted from their pre-paid account. Total revenue is shared among the MNO, app store and application developer. Mobile operators usually keep 30-50 percent of the revenue generated from app sales, as agreed with the developers and © 2010, Portio Research. All Rights Reserved 63 Mobile operator stores, such as Vodafone 360 and China Mobile Mobile Market offer higher incentives to developers, to be able to attract more developers who will develop a wider range of applications for their users.
  • Mobile Applications Futures 2010-2015 application stores. The remaining revenue is divided between the developer and application store in a ratio of 70:30, in favour of the developer. Thus, operator billing results in the reduction of a developer’s share from 70 percent to as low as 40 percent. The following figure describes revenue sharing in the Operator-centric business model, in the case of third-party app stores using operator billing. Figure 39: Revenue Sharing in the Case of Third-party Stores Using Operator Billing Mobile Operator 40% Remaining 60% App Store 30% Developer 70% The mobile operator, on average, receives 40 percent of gross revenues; passing on the remaining 60 percent to an app store. The remaining 60 percent is then split further, with an app store receiving 18 percent and a developer receiving 42 percent of total gross revenues. Source: Portio Research Ltd. The next figure provides a SWOT analysis for mobile application stores based on the Operator-centric model. 64 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 SWOT Analysis – Operator-centric Business Model Figure 40: SWOT Analysis – Operator-centric Business Model Strengths • Operator billing is perceived as a safer payment option. • Greater variety in choosing handsets (that the app could work with), as apps are not for a singular brand. • Operators have direct contact with consumers. Weaknesses • Operator billing (and a smaller revenue share) reduces developers’ incentives to create apps for MNO stores. • Longer development lifecycle, as apps have to be tested on multiple handset brands and Operating Systems. • Operators can leverage customer information, such as location, usage and presence, to offer localised content. • Limited choice of apps because of fragmentation of developers across various platforms. Opportunities Threats • Promoting application developments through developers, by giving better incentives and higher revenue share to provide a wide range of applications. • Operators may turn in to ‘dumb-pipes’ to carry the data due to the encroachment of the value chain by online and device players. • Developing an applications pricing mechanism that will be optimised on the basis of nature, popularity and market potential of the application. • The operators’ position in the value chain may weaken further, with app stores becoming the primary source of mobile content distribution. Source: Portio Research Ltd. Blend of App-centric and Operator-centric Business Models Application stores by handset vendors (such as Nokia and Samsung), OS vendors (such as BlackBerry, Android and Windows) and third-party vendors (such as Handmark) offer multiple payment options. In addition to credit cards, Paypal and payment gateways, these app stores partner with mobile operators to offer operator billing 37 for application downloads. OS vendors such as BlackBerry, Android and Windows invite developers and provide them with tools and the SDK (software development kit) to facilitate app development for their respective operating system (OS). Developed apps can only run on their specific OS. Handset and third-party vendor stores set up their own developer communities and develop applications compatible with a variety of handset features and operating systems. Some MNOs, including Sprint, Telus and Alltel, outsource the development and operations of their mobile application stores to these third-party app stores. These stores, operating in the name of brands which do not own the hosted applications, are termed as White-label stores. The billing system used in these cases could be credit card or operator billing. The following figure depicts a blend of the App-centric and Operator-centric business models. 37 Note: The operator billing will involve the revenue sharing arrangement as described in Figure 39 above. © 2010, Portio Research. All Rights Reserved 65 Handset and third-party vendor stores set up their own developer communities and develop applications compatible with a variety of handset features and operating systems.
  • Mobile Applications Futures 2010-2015 Figure 41: Blend of App-centric and Operator-centric Business Models Applications OS/OEM Platforms Application Developers Application Store/ Aggregators Billing Enablers/ Operator Billing Consumers Revenues Source: Portio Research Ltd. Since the business model followed is a blend of App-centric and Operator-centric models, it carries the merits and drawbacks of both models. SWOT Analysis – Blend of App-centric and Operator-centric Business Models Figure 42: SWOT Analysis – Blend of App-centric and Operator-centric Business Models Strengths Weaknesses • Allows easy entrance for new and small developers, resulting in fierce competition and favourable pricing for users. • Lack of standards in application development hinders the swift rollout of new applications. • Provides apps for a variety of handset platforms and hence greater flexibility of choice. • Offers a majority of applications from third-parties, for free. • In the case of third-party stores, apps from multiple vendors increases the complexity for consumers, in terms of remembering passwords for different apps. Opportunities Threats • Offers an open service framework adopting the cloud computing model to access network and device assets, without interfering with the core network. • Since app developments are not controlled by operators, the use of some apps may result in network overload; for example Sling Player was not allowed to use AT&T’s 3G network – after initially congesting the network – until the developer limited the bandwidth consumption of the app. • Integration of app with single platform, enabling automatic updates and avoiding manual syncing and sharing of data for different apps. Source: Portio Research Ltd. 66 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Chapter 8 Case Studies – Application Stores © 2010, Portio Research. All Rights Reserved 67
  • Mobile Applications Futures 2010-2015 Case Studies – Application Stores Mobile Application Stores: Worldwide Mobile application stores are growing at a rapid pace worldwide. With 49 additional app stores launched in the first half of 2010, there were 85 mobile application stores worldwide at end-July 2010. 38 As the following figure displays, an overwhelming majority of these stores are categorized as third-party app stores, followed by app stores by mobile operators. In many cases, third-party app stores act as mere aggregators of apps that source applications from other app stores. Figure 43: Mobile Application Stores Split – By Ownership Category (In Percent, July 2010) 39 70.2% 15.5% 7.1% 7.1% Stores by OS vendors Stores by smartphone vendors Stores by mobile operators Third-party App Stores Source: Portio Research Ltd. It is important to note, however, that while third-party app stores account for 70.2 percent of all app stores, that the much fewer OS/smartphone vendor stores and MNO stores (collectively 29.7 percent market share) record the overwhelming majority of app downloads. To illustrate this further, of the total 6.7 billion mobile application downloads expected as of end-2010, the OS/smartphone vendor stores and MNO stores are collectively forecast to contribute approximately 86 percent of total application downloads, compared to 14 percent by third-party app stores. App stores by OS vendors have the competitive advantage of customer loyalty, as their applications are compatible only with their specific OS. However, this model has its own limitations, as the device base for running these applications is limited in comparison to other models where the apps can run on multiple operating systems. Similar to this, app stores by Smartphone device vendors provide applications that exclusively support their handsets. App stores by MNOs usually have a regional focus and do not operate at a worldwide level. The success of these app stores is determined by the incumbency of the operator in that region. China Mobile and Vodafone 360 are two successful examples of such stores. The following table provides a list of mobile application stores by mobile operators, OS and smartphone vendors. 38 39 Source: Wireless Industry Partnership Report – July 2010 Note: The percentages do not add up to 100 percent because of rounding off errors. 68 © 2010, Portio Research. All Rights Reserved With 49 additional app stores launched in the first half of 2010, there were 85 mobile application stores worldwide as of end-July 2010
  • Mobile Applications Futures 2010-2015 Table 22: Mobile App Stores – By OS Vendors, By MNOs, By Smartphone Vendors (Worldwide, July 2010) App stores by OS Vendors App Stores by MNOs App Stores by Smartphone Vendors Google Android Market Airtel App Central LG Application Store Blackberry App World AT&T AppCenter Nokia Ovi Store Apple App Store Idea Application Store Play Now Arena (Sony Ericsson) Palm App Catalog M1 AppStore (M1 Singapore) Samsung Applications Store Symbian Horizon Mobile Market (China Mobile) SHOP4APPS (Motorola) Windows Marketplace for Mobile Mstore (Telefonica/Movistar) StoreOid (General Mobile) Optus Application Store Orange App Shop R-World (RCom) Softwareload (Deutsche Telekom) VCAST Apps Storefront (Verizon) Vodafone 360 web2go (T-Mobile USA) Turkcell Uygulamala Pazari (Turkcell) T-Store (SK Telecom) Source: Portio Research Ltd. There has been a significant growth in the number of third-party app stores. The main reason behind this is that these stores offer maximum flexibility, as the applications provided by these stores support multiple OS and multiple handset devices. However, unlike other app store models, these stores are typically exposed to a lack of customer loyalty. The following table provides a list of mobile application stores by Third Party Vendors. © 2010, Portio Research. All Rights Reserved 69
  • Mobile Applications Futures 2010-2015 Table 23: Mobile App Stores by Third-Party Vendors (Worldwide, July 2010) App Stores by Third-Party Vendors/ Aggregators AndAppStore bbNATION iPhoneApps360 My Hub AndroidPit BoostApps iWikiPhone Netfront Widgets Androlib Camangi Market Kero Mobile neXva AppBrain Cellmania Kindle App Store OpenAppMkt AppCentral Chomp LePhone App Store Pdassi Appcity Clickgamer mCore Marketplace Phoload AppComments Crackberry mjelly Plaza Retail Appoke Cydia Store Mikandi Pocket Gear Appolicious djuzz Mobango PreCentral webOS App Gallery AppsLib FastApp Store MobiHand Premier App Shop Appsfire Flypp MobileIron Enterprise App Store SlideMe AppShup GetJar MobileRated TomTom App Store AppStoreHQ Handmark MobileWorxs App Store whiteapp AppUp Center Handster Mobspot Wholesale Applications Community AutoLinQ HouseOfPalm Mplayit zanox Application Store Source: Portio Research Ltd. As per the available download data, the top ten mobile stores are given in the table below. Table 24: Top 10 Mobile App Stores by Total Downloads (Worldwide, June 2010) Rank Name of App Store App Store Type Number of Applications Available Applications Downloaded (In Million, End-June 2010) 1 Apple App Store OS vendor 250,000 5,500 2 GetJar Third-party 65,000 1,000+ 3 Mobango Third-party NA 700+ 4 Cellmania Third-party 20,000 500 5 Nokia Ovi Store Smartphone Vendor 9,50040 332 6 Blackberry App World OS vendor 7,000 225 OS vendor 140,000 200+ 7 Pocket Gear 41 8 MobileRated Third-party NA 100+ 9 Palm App Catalog OS vendor 1,450 40 10 Airtel App Central MNO Store 71,000 13 Source: Portio Research Ltd. and Wireless Industry Partnership 40 Note: The latest data available was for April 2010 Note: The number of apps available and apps downloaded data for PocketGear also includes the data for Handango, now combined under PocketGear after the acquisition of Handango by PocketGear in February 2010. 41 70 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Most region-specific app stores are stores operated by MNOs in that region. Stores by OS vendors and smartphone vendors usually have a wider regional availability due to a scattered device user base presence. However, global app stores, such as Apple’s App Store do also take into account regional variations in consumer behaviour and customise their app stores for each market. Most region-specific app stores are stores operated by MNOs in that region. Table 25: Significant App Stores – Regional (June 2010) Number of Applications Available (June 2010) 71,000 Mobile Market (China Mobile) 20,000 Optus Application Store (Australia) 2,500 Orange App Shop 5,000 42 My Hub NA Softwareload 15,000 AT&T AppCenter NA VCAST Apps Storefront (Verizon Wireless) 250 web2go (T-Mobile USA) NA Apple App Store 225,000 Blackberry App World 7,000 Google Android Market Asia Pacific Name of App Stores Airtel App Central Region 70,000 Europe North America Worldwide Source: Portio Research Ltd. and Wireless Industry Partnership 42 Note: The latest data available was for December 2009 © 2010, Portio Research. All Rights Reserved 71
  • Mobile Applications Futures 2010-2015 Case Study: Apple App Store (North America) Parent Company: Apple Launch Date: July 2008 Regions of Operation: Worldwide, with a certain degree of localisation in country-specific stores Total Number of Downloads Worldwide: 6.5 billion (end-August 2010) Total Number of Applications Available Worldwide: 250,000+ (August 2010) Pricing: Free and Paid Payment Mode: Via credit card (iTunes account) Apple’s Commission: 30 percent Joining Fees: USD 99 (for individuals)/ USD 299 (for enterprises); there are no application signing or submission fees Apple App store is an applications service for Apple’s iPhone, iPad and iPod Touch. North America is the largest market for Apple, accounting for almost 36 percent of its smartphone shipments worldwide. Business Model Apple follows an App-centric business model through which it liaises directly with application developers and excludes mobile network operators from the value chain. Apple maintains a direct relationship with developers and App Store users, and all the revenue generated from the sale of mobile applications is shared between Apple (30 percent) and its developers (70 percent). Consumers make payments for app downloads through Apple’s iTunes account using their credit cards. The billing enablers involved in facilitating the credit card transactions charge minimal fees. Pricing Apple provides paid and free applications to its customers. Of the total applications available in the US for iPhone, nearly 29 percent of applications are free; while in the case of iPad, free apps account for nearly 26 percent of total available applications. 43 The average price of the most popular applications in Apple’s North American App Store is nearly USD 2.43. Popular Mobile Applications The next table shows the most popular paid and free applications available at Apple App Store in North America. 43 Source: Distimo, August 2010 72 © 2010, Portio Research. All Rights Reserved The average price of the most popular applications in Apple’s North American App Store is nearly USD 2.43.
  • Mobile Applications Futures 2010-2015 Table 26: Most Popular Paid and Free Applications – Apple App Store (North America, February 2010) Rank Paid Applications Free Applications 1 Live Messenger (Social Networking, Price: USD 0.94) Live Messenger (MSN Messenger, Windows Live ID) (Social Networking) 2 Tap Tap Revenge 2.6 (Games, Price: USD 0.94) Facebook (Social Networking) 3 Live Messenger (MSN Messenger, Windows Live ID) (Social Networking, Price: USD 0.94) Call of Duty: World at War: Zombies Lite (Games) 4 Doodle Jump (Games, Price: USD 0.94) Sunday Lawn (Games) 5 Plants vs. Zombies (Games, Price: USD 2.83) Cinépolis (Entertainment) 6 Qik Video Camera for any iPhone (Utility, Price: USD 1.88) Titanic Rescue (Games) 7 ALL-IN-1 GAMEBOX (Games, Price: USD 0.94) Battery Boost (Productivity) 8 Bejeweled 2 (Games, Price: USD 2.83) Driver (Games) 9 Pocket God (Books, Price: USD 0.94) Exotic Positions (Lifestyle) 10 iBeer (Entertainment, Price: USD 0.94) Red Ball (Games) Source: Distimo, February 2010 Success Factors • • • Substantial device base: Apple has a huge installed base of iPhones, iPads and iPod Touch devices. iPhone shipments in June 2010 alone were close to 4 million; total shipments in 2010 are expected to be close to 38 million. 44 Number of applications: Apple App Store has a significant number of mobile applications available, offering a bewildering choice to users: there were more than 250,000 available applications at end-August 2010. Customisation: After the launch of the iPad, Apple noted that developers should customise applications to fit the iPad’s big screen. At the beginning of June 2010, more than 8,500 custom-made apps for iPads were available for sale at the App store. Challenges • • Competition: Various players such as Google, Palm, RIM, Nokia, LG and Microsoft have developed app stores similar to Apple’s, and are posing a threat to Apple. Google Android is emerging as a significant competitor to Apple, with more than 70,000 apps in its store and the activation of more than 160,000 Android devices per day. 45 No clear guidelines on content: Apple does not provide specific guidelines for the type of content permissible at its App Store. For example, it rejected ‘Mark Fiore’s Pulitzerwinning cartoon’ application mentioning that it contained satire on public figures, but later it was approved. There is no clear content policy, which is a cause of concern among users and developers. 46 44 Source: http://www.electronista.com/articles/10/05/20/board.maker.tips.point.to.iphone.estimates/ Source: http://www.pcmag.com/article2/0,2817,2366624,00.asp 46 Source: http://www.wired.com/gadgetlab/2010/04/app-store-transparency/ 45 © 2010, Portio Research. All Rights Reserved 73 iPhone shipments in June 2010 alone were close to 4 million; total shipments in 2010 are expected to be close to 38 million.
  • Mobile Applications Futures 2010-2015 Recent Developments • In February 2010, Apple added a browser-based 'iTunes Preview' function, which allows users to view a screenshot and a brief description of an app before launching iTunes. 47 At beginning of July 2010, Apple launched the iAd mobile advertising network for its new iOS4. iAd is a service that allows advertising companies to post their advertisements inside mobile applications. The service has already taken bookings of USD 60 million, which reportedly accounts for nearly half of the forecasted total mobile advertising spend in the US for the second half of 2010 48 • 47 48 Source: http://arstechnica.com/apple/news/2010/02/apple-has-added-app-store.ars Source: http://www.guardian.co.uk/technology/2010/jun/08/apple-iad-iphone-advertising-bookings 74 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Case Study: Vodafone 360 (Europe) Vodafone launched this mobile application store in September 2009. It offers an integrated mobile Internet experience with phone, e-mail and social networking combined together, and a wide range of applications – including music and games, centralised contact management and navigation capabilities – through a single platform. The service is available in eight European countries. Parent Company: Vodafone Launch Date: September 2009 Regions of Operation: Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain and the UK Total Number of Downloads Worldwide: 1 million (end-February 2010) Total Number of Applications Available Worldwide: 8,500 (May 2010) Runtime Platform Supported: JIL, Dalvik, Native Pricing: Free and Paid Payment Mode: Vodafone Operator Billing Vodafone’s Commission: 30 percent Joining Fees: Nil Mobile applications are available across various categories, such as address book, communication, maps, photos and games. The address book enables users to integrate social networking, IM client, e-mail and phone contacts to one common place; to share the contact details; to get updates about their friends and to maintain an online back-up of their contacts. Vodafone 360 lets users connect with the world through communication applications, and has an extensive music catalogue from which users can select and download songs of interest. Vodafone 360 allows users to share their locations, photos and videos in real time. Business Model Vodafone is based on the Operator-centric model, wherein the 360 store acts as an interface between developers and users. Vodafone offers various services and applications via its proprietary platform, and receives revenues directly from users. Vodafone 360 charges customers through operator billing, wherein the download amount gets deducted from their pre-paid accounts or added to their monthly mobile bills. The download data is regularly shared with developers, making it easier for them to keep track of revenues. Pricing The 360 store offers free and paid applications in all eight of its markets, and paid application prices range from EUR 0.49 to EUR 9.99 (USD 1.30 to USD 13.15). A developer can get an application instantaneously launched in multiple markets, and still charge different prices in different markets. App revenues are shared between developer and Vodafone in the ratio of 70:30. Popular Applications The next table provides the list of the top five downloaded applications on Vodafone 360 between September 2009 and March 2010 – for each of its eight European markets. © 2010, Portio Research. All Rights Reserved 75 App revenues are shared between developer and Vodafone in the ratio of 70:30.
  • Mobile Applications Futures 2010-2015 Table 27: Most Popular Applications, Vodafone 360 (Europe, September 2009 to March 2010) Top 5 Application Downloads from September 2009 to March 2010 Country 1 2 3 4 5 Vodafone Quick–Check Vodafone Mobile TV Wetter.com Schatzi anrufen Streichhotzer Ziehen Greece Facebook Live Tv Language Translator Alcohol Meter Analog Clock Ireland Facebook LED Scroller Hangman Four In A Row Language Translator Italy Facebook LED Scroller Language Translator PagineGialle Mobile Tirami il dito Hyves TV Gids LED Scroller Flitsers Search Light Portugal Facebook LED Scroller Flashlight Alcohol Meter Tic Tac Toe Spain Facebook LED Scroller Language Translator Informacion de Trafico Gol T The UK Facebook LED Scroller Lightsout Aquarium Four In A Row Germany The Netherlands Source: Vodafone, April 2010 Success Factors • • • • • High subscriber base: Vodafone serves millions of mobile customers across Europe and therefore enjoys the benefit of having subscriber information, in terms of location and preferences, to be able to develop applications specific to user needs and interests. Customised user experience: Vodafone offers localised content and applications to suit the need of users in different markets. Moreover, by using customer information (location, usage history), Vodafone drives personalised promotions and recommendations to help customers select personally-relevant applications. Single development platform: Vodafone provides developers with a single development platform that allows access to Vodafone’s European (and theoretically global) customer base. This also enables developers to deploy the same application on all the stores across different markets. Simple and secure billing model: Vodafone enables developers to charge customers through operator billing, wherein the download amount gets deducted from users’ prepaid accounts or included in their monthly bills. Users are not required to hold a credit card or PayPal account to purchase mobile applications. Compatibility across mobile devices: Vodafone 360 applications are compatible with as many as 100 mobile devices, and thus have access to a larger customer base. Challenges • • 76 Competition: Vodafone is competing against giants such as Apple, Google, Nokia and GetJar to gain a substantial foothold in the market. Heterogeneous Devices, Operating Systems and Platforms: One of the biggest challenges for Vodafone 360 is to have its applications compatible across multiple operating systems, application platforms and a wide range of mobile devices. © 2010, Portio Research. All Rights Reserved Vodafone 360 applications are compatible with as many as 100 mobile devices, and thus have access to a larger customer base
  • Mobile Applications Futures 2010-2015 Recent Developments • • • In order to expand its reach on Android devices and offer developers cross platform propositions, Vodafone is offering 360 services on Android devices, such as the HTC Wildfire and Sony Ericsson Xperia X10 Mini Pro. In July 2010, Vodafone announced a beta program which allows developers to publish free native Android applications on the Vodafone 360 store. Vodafone 360 will now offer android native apps in addition to JILbased applications. 49 In the first week of July 2010, Vodafone launched two smartphones with Android OS in the Portuguese market. The smartphones – Vodafone 845 and Sony Ericsson X10 Mini Pro – are available at the affordable prices of EUR 134.90 and EUR 229.90 (USD 177.55 to USD 302.58) respectively. Users of these phones will have access to both Vodafone 360 services and Android Market. 50 In June 2010, Vodafone and Mobile Telesystems (MTS) announced the launch of the mobile application store ‘360 from MTS’ in the Russian market. It offers integrated mobile Internet services with a wide range of mobile apps: entertainment, messaging, music, games, photos and video. ‘360 from MTS’, based on Vodafone 360’s concept, has been customised for the Russian audience. 51 49 Source: http://www.vodafone.com/start/media_relations/news/group_press_releases/2010/360_shop_android.html 50 Source: http://www.vodafone.com/start/media_relations/news/local_press_releases/portugal/portugal_press_release/vodafo ne_launches41.html 51 Source: http://www.prnewswire.com/news-releases/mts-to-launch-360-from-mts---an-innovative-suite-of-mobileinternet-services-96779789.html © 2010, Portio Research. All Rights Reserved 77
  • Mobile Applications Futures 2010-2015 Case Study: China Mobile’s Mobile Market (Asia Pacific) Parent Company: China Telecom Launch Date: August 2009 Regions of Operation: China Total Number of Downloads Worldwide: 25 million (end-June 2010) Total Number of Applications Available Worldwide: 20,000 (end-June 2010) Pricing: Free and Paid Payment Mode: China Mobile Operator Billing China Mobile’s Commission: 30 percent Joining Fees: Nil In September 2009 52, China Mobile launched its own smartphone OS—OPhone—with the Google Android-based Open Mobile System (OMS) operating system. It offers a Software Development Kit (SDK) to developers, which enables them to develop applications supported on Ophone. Besides OMS, China Mobile’s Mobile Market applications are supported on other operating systems such as Symbian and Windows Mobile. Applications are also offered for smartphones from vendors such as Nokia, Sony Ericsson, Dell, Lenovo, LG, Motorola, Dopod, Panasonic and Samsung. The application store offers apps across different categories, including games, music, wallpapers, video and e-books. Business Model China Mobile follows the Operator-centric business model facilitated with operator billing. It follows the 70:30 revenue sharing model offering 70 percent share of the revenues to developers. Popular Mobile Applications The table on the next page shows the most popular paid and free applications on China Mobile’s Mobile Market. 52 Source: http://www.chinadaily.com.cn/business/2009-09/01/content_8639591.htm 78 © 2010, Portio Research. All Rights Reserved In September 2009, China Mobile launched its own smartphone OS—OPhone— with the Google Androidbased Open Mobile System (OMS) operating system.
  • Mobile Applications Futures 2010-2015 Table 28: Most Popular Paid and Free Applications – China Mobile’s Mobile Market (China, July 2010) Rank Paid Applications Free Applications 1 Life-disaster self-help (Utility, Price: USD 1.00) Sound Insect Cell Phone Cam (Utility) 2 Eating Beans (Pac man) (Games, Price: USD 0.50) Phone Torch (Utility) 3 Color Rubik's cube-Demo Edition (Games, Price: USD 0.10) Ancient You (Utility) 4 Magic Bricks (Games, Price: USD 0.15) Independence (Games) 5 Drinks Calculator (Games, Price: USD 0.09) Worm Hole Number Application (Utility) 6 Doors of Blame (Games, Price: USD 0.10) Sokoban (Games) 7 Colorful Flashlight (Utility, Price: USD 0.10) Men Series 1 (Games) 8 Hyper-real personality test (Games, Price: USD 0.20) Serendipity Index (Themes) 9 You Mean Adventure (Games, Price: USD 0.50) Happy Under (Utility) 10 Asian Games Countdown (Utility, Price: USD 0.09) Themes (Themes) Source: China Mobile Mobile Market Success Factors • • • • With the free open Android-based OMS, it offers application developers scope to develop a wide range of applications. Lenovo, Dell, Dopod, LG, Samsung, Motorola, ZTE, Coolpad, Yulong, Motorola, TCL and Hisence are the vendors supporting OPhone OS, and thus offering a wide variety of handsets. The large customer base of 554 million 53 provides a good addressable market. Convenient and trusted mode of payment through operator billing is also contributing to the application store’s success. Challenges • • • Currently, there is low smartphone and 3G penetration in China. There is a large low-income consumer base, while the cost of smartphones and mobile apps is high. The testing of applications on various vendors’ handsets increases an application’s development life cycle. Recent Developments • • • 53 In March 2010, Nokia and China Mobile partnered to open the MM-Ovi app store. The MM-Ovi store has applications from both the Nokia and China Mobile application stores. In March 2010, China Mobile and China Broadcast Corp jointly launched the China Multimedia Mobile Broadcasting (CMMB)-enabled mobile TV service In accordance with a Memorandum of Understanding (MoU) signed between China Mobile and SmartTrans in January 2010, China Mobile will provide its new customers with handsets that have a pre-installed SmartTrans Mobile Telephone Application Management Platform, while the same will be made available for download by existing customers. SmartTrans is a software solution provider for companies delivering goods or services, and will be charging China Mobile for the licensing and maintenance of the application management software. Source: http://www.chinamobileltd.com/images/pdf/2010/ir/ir_2010_e.pdf © 2010, Portio Research. All Rights Reserved 79
  • Mobile Applications Futures 2010-2015 Chapter 9 Case Studies – Popular Applications 80 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Case Studies – Popular Applications Facebook Launch Date on Mobile: - Mobile Website: January 2007 - Mobile Application: October 2007 Application Type: Social Networking Mobile User Base: 150 million (July 2010) Pricing: Free Social networking sites have seen phenomenal growth in the last couple of years, and Facebook in particular has emerged as a leader in the social networking space. Facebook was launched in February 2004 and its vast acceptance led to the launch of a website customised for access through mobile handsets (m.facebook.com) in January 2007. The Facebook application for mobile platforms was launched in October 2007. The application is available on numerous app stores, such as Apple App Store, BlackBerry App World, Windows Marketplace and Nokia Ovi Store. Although Facebook first launched its mobile application on BlackBerry devices in October 2007, its success is tied to the Apple iPhone version. With success on Apple and BlackBerry, Facebook expanded to numerous mobile devices such as Nokia, Windows, Android and others. Users access Facebook either through the mobile version of the Facebook website or by downloading the Facebook application on to their mobile phones. The following mobile websites are being offered by Facebook: • • • m.facebook.com – This is a standard website that works on any mobile browser touch.facebook.com –The website is designed for touch screen mobile devices x.facebook.com – The website is meant for smartphone users Access to Facebook through the application is quicker than browser-based access. The app is custom-built for operating systems and devices, and allows optimised display features and easy viewing – along with the ability to upload pictures and videos. The Mobile Facebook (m.facebook.com) website’s performance depends on the capabilities of the mobile web browser. Furthermore, the mobile app allows users to send and receive messages, poke their contacts and put wall posts 54 using text messages. The mobile application has a provision for a phone book, which displays friends’ contact information. With 150 million users accessing Facebook on their mobile phones (through customised applications, as well as browser-based access), Facebook has achieved remarkable success in the world of social networking through mobile phones. 55 Facebook Mobile gives flexibility to users to stay connected and communicate with their friends anytime, anywhere. 54 Note: Pokes and wall posts are Facebook features for writing messages and comments which are shared with other Facebook contacts. 55 Source: www.facebook.com/press/info.php?statistics © 2010, Portio Research. All Rights Reserved 81 With 150 million users accessing Facebook on their mobile phones, Facebook has achieved remarkable success in the world of social networking through mobile phones.
  • Mobile Applications Futures 2010-2015 Facebook Milestones The figure below depicts Facebook milestones. Figure 44: Facebook Milestones January 2007 • Launched its website ‘m.facebook.com’ on the mobile platform, to allow users to access Facebook on their handsets August 2007 • Launched a website version, iphone.facebook.com, for native iPhones, with added features such as photos October 2007 • Partnered with T-mobile to launch its first ever mobile application on Research In Motion’s BlackBerry devices June 2008 • Released its application, named ‘Facebook for Palm’, for PalmOSbased Centro and Treo smartphones July 2008 • Launched its mobile application on the Apple iPhone and Windows Mobile platforms March 2009 • Launched ‘Facebook Connect’ on the iPhone. This allows users to connect their Facebook profile to other mobile websites and applications. • A Facebook application with limited functionalities was launched on Android devices. September 2009 May 2010 August 2010 • Facebook Connect was launched on Facebook’s mobile application and website for various mobile platforms and devices. • Launched ‘Facebook Zero’, a light-weight website which users can access through 0.facebook.com. The website was launched to penetrate the huge untapped market of feature phone users in emerging markets. Facebook entered into a partnership with 50 wireless operators; the social networking giant plans to pay the data charges to mobile operators so that users can enjoy the website for free, and hence drive Facebook growth in emerging markets. • Launched a beta version of Facebook SDK for Android developers, which allows them to integrate Facebook platform features into their applications. • Introduced functionality, ‘Facebook Places’, which allows users to see their friends’ location and share their own location. Facebook Places brings location-based services to a social networking world. Source: Portio Research Ltd. 82 © 2010, Portio Research. All Rights Reserved Facebook Places brings location-based services to a social networking world.
  • Mobile Applications Futures 2010-2015 Features of Facebook The following figure highlights the various features that Facebook offers mobile users. Figure 45: Features of Facebook for Mobile Users Staying Connected • • • • • Personalised Friends List Status Updates Activity Updates Find a Friend Friend Suggestion Facebook enables users to create a list of friends and share their whereabouts and actions with their friends. Facebook helps users to track old friends and schoolmates and establish a connection with them all over again. Status updates is one of the most popular features among mobile users. Communication • • • IM Client Messages Wall Communication is the central theme of any social networking site. Facebook offers space to users to send messages to their friends through real-time communication options such as instant messaging (IM), and offline communication options such as Messages and Wall. Manage Photos and Videos • • • • Upload Photos/Videos Add Captions Tag Friends Privacy Settings Facebook allows users to upload photos and videos from their mobile phones. The option to add photo captions and tag the photos is another attractive feature. There are privacy rules that define who can view the users’ photos. Profile Manager • • • Edit Profile Set/Update Profile Photo Privacy Management Facebook enables users to modify and update their profiles whenever required. Users can take pictures from their mobile phone and can upload them directly to become their profile picture. Games and Utilities • • • • Birthday Updates News Feeds Notifications Games and Apps such as Farmville, Horoscope, etc. Facebook offers several simple, yet entertaining games and applications to users, which keeps them addicted to the application. It also offers features such as birthday reminders, news feeds and notifications about friends’ updates, etc. Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 83 Facebook offers several simple, yet entertaining games and applications to users, which keeps them addicted to the application.
  • Mobile Applications Futures 2010-2015 Pricing The Facebook mobile application is available for free. However, since the application requires access to the Internet, users need to pay data charges to their mobile operators. Moreover, users have an option to update their Facebook status or reply to the wall post using SMS. Users are charged through operator billing wherein the Internet usage and SMS charges either get deducted from their pre-paid credit or are added to the monthly mobile bill. User Base The figure below depicts the growth in the number of users accessing Facebook from mobile handsets. Figure 46: Facebook – Mobile User Base 150 160 Mobile User Base (In Million) 140 120 100 100 80 65 60 40 25 20 0 Jan-09 Aug-09 Jan-10 Jul-10 Period Source: Facebook, Portio Research Ltd. Success Factors The table below highlights the factors that have helped Facebook attract millions of mobile users. Table 29: Success Factors – Facebook Mobile Application Factor Strategy Uniformity of Features Offered Facebook has maintained uniformity in the features being offered on mobile and desktop versions, which has helped users to easily associate themselves with the mobile version of the application. Control Over Information Facebook gives users control over what they want to share, how they want to share and with whom they want to share. It allows users to express themselves the way they want to. Continuous Revision Enhanced versions of Facebook applications are launched regularly to meet the ever-changing user needs and to match up the hardware requirements of new devices in the market. Moreover, Facebook takes into account the offline behaviour of users and transforms it into online offerings/features. Multi-Lingual and Localisation The Facebook application is available in different languages, such as Korean and Russian, which makes it easier to use. Source: Portio Research Ltd. 84 © 2010, Portio Research. All Rights Reserved Users are charged through operator billing wherein the Internet usage and SMS charges either get deducted from their pre-paid credit or are added to the monthly mobile bill.
  • Mobile Applications Futures 2010-2015 Scope/Type of Advertisements The success of Facebook’s mobile application is clear from the fact that advertisers and businesses are using the Facebook app as a platform to promote their products and reach prospective customers. Adverts are integrated into the Facebook application as text ads, banner ads or Facebook ads placed on the right hand side of the page. Recent Developments • • • In May 2010, Apple introduced the Apple App Store within the Facebook application. Facebook users can now access all the applications on the Apple App Store from their Facebook account. If a user likes any application, they can click the ‘Get APP’ button (a separate button is available for each application) and the user will be directed to the Apple Store. Moreover, a ‘Share’ button is made available for every application, which enables users to post the application’s link on their Facebook walls. In August 2010, Vonage, a voice and messaging company, launched a free Facebook application named ‘Vonage Mobile’ for iPhone, iPod Touch, iPad and Android devices. The application allows Facebook users to call their Facebook friends located anywhere in the world for free. To place a call, it is necessary for both the parties (the caller and the receiver) to have the ‘Vonage Mobile’ application installed on their mobile phones. Facebook plans to become a platform for developers to distribute mobile applications. © 2010, Portio Research. All Rights Reserved 85
  • Mobile Applications Futures 2010-2015 Pandora Launch Date on Mobile Platform: May 2007 Application Type: Internet Radio and Music Player Mobile User Base: 28 million (June 2010) Pricing: Free and Paid Pandora is an automated Internet radio service where a user can enter a song, album, artist or a band of their choice, and based on the user’s selection the software selects similar songs and creates a personalised station for the user. The songs are picked by Pandora’s proprietary system, ‘Music Genome Project,’ that analyses the songs against approximately 400 distinct musical parameters, such as melody, harmony, rhythm, genre, instrumentation, orchestration, lyrics, artist, vocals, etc. Pandora was introduced in 2000 and reached a user base of 60 million (of which 28 million users access Pandora from their mobile phones) in July 2010. In May 2007, Pandora was launched on feature phones but pricing and compatibility turned out to be obstacles. Operators Sprint and AT&T charged users a monthly subscription fee of USD 2.99 and USD 8.99 respectively, which hindered Pandora’s success on feature 56,57 In July 2008, Pandora was launched on Apple’s iPhone and within 24 hours the phones. number of downloads surpassed the total number of downloads in the last 14 months. The major drivers of the success of Pandora’s iPhone app were the introduction of a free version of the application, along with a better user experience, bigger screens (on the iPhone) and the perception of the iPhone as a music device. 56 Source: http://newsreleases.sprint.com/phoenix.zhtml?c=127149&p=irolnewsArticle_newsroom&ID=1005956&highlight= 57 Source: http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=24675 86 © 2010, Portio Research. All Rights Reserved In July 2008, Pandora was launched on Apple’s iPhone and within 24 hours the number of downloads surpassed the total number of downloads in the last 14 months.
  • Mobile Applications Futures 2010-2015 Pandora Milestones The figure below depicts Pandora’s milestones. Figure 47: Pandora Milestones May 2007 November 2007 July 2008 December 2008 • Entered the mobile market by signing a direct deal with the mobile carrier Sprint to offer personalised radio station services to its mobile users. • Launched its services on ‘AT&T’ to expand the Internet radio to a higher number of devices and users. • Launched the free version of the application on Apple’s iPhone and iPod Touch, through iTunes App Store to capture the smartphone users. • Launched an application for Windows mobile devices and announced a free version of the mobile app on 20 Sprint mobile phones. March 2009 • Introduced its application on BlackBerry devices to replicate the success that it had achieved on iPhone. May 2009 • Released a paid version of its application, named ‘Pandora One’, which offered ad-free playback and higher quality audio. June 2009 • Launched its application on the Palm App Catalog. September 2009 April 2010 • Pandora was launched on Android devices with an added feature ‘deep tap’, which allows users to select any song and artist from android music player and play similar songs and artists on Pandora. • Introduced a multi-tasking feature for iOS4 compatible devices, such as iPhone 3GS, the third-generation iPod Touch and iPhone 4. The feature uses the background audio API in iOS4 and allows users to listen to songs even after they switch to other applications or browse through the Internet. • Collaborated with Facebook to allow its users to broadcast their music preferences and help them discover new music through their friends. Source: Portio Research Ltd © 2010, Portio Research. All Rights Reserved 87
  • Mobile Applications Futures 2010-2015 Features of Pandora The following figure describes the various features of Pandora software for mobile users. Figure 48: Features of Pandora for Mobile Users Customisation • • • Create Personalised Stations Move Songs between e Stations Skip/Block Songs Pandora, a music streaming application, creates a personalised radio station for users. The station is customised as per the song or artist choice entered by users. Pandora allows users to have more than 100 stations and also allows users to shift songs from one station to another. Also, users always have the choice to skip or block any song. Share with Friends • • Share a Station Recommend a Song Pandora enables users to share their radio stations with friends and also recommend songs and artists to their friends. Friends generally know about each others’ musical tastes and with the help of these features they can help each other in building their own radio stations. Information • • • Album Cover Artist Biographies Song Progress Bar Pandora radio provides the option to users to view artist biographies and album artwork. Users can keep track of their songs through the song progress bar. Trials and Feedback • • • Try Before You Buy Rate the Song Thumb up and Down (Approvals or Disapprovals) Users can approve or disapprove to rate a song. Pandora then considers this information for future selections. Moreover, users can at any time listen to samples of bookmarked songs and then decide whether they want to buy the song or not. History • • Track Past Songs Bookmarks Pandora enables users to bookmark songs and artists for future reference; it also allows users to view and listen to tracks which were previously played on the radio station. Source: Portio Research Ltd. 88 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Pricing Pandora is available in both free and paid versions for a variety of smartphone platforms, such as iPhone, Android, Windows Mobile, Palm OS, etc. The paid version, popularly known as ‘Pandora One’, has no adverts and the audio quality is superior; users are charged an annual subscription of USD 36. 58 The free version, however, is supported by text and audio ads. Here, the user gets 40 hours of listening per month on their free account. If the 40 hours are exhausted in less than a month, the user can buy a subscription for the rest of the month for 99 cents. 59 Since an Internet connection is required for streaming the songs, users are required to pay the applicable data charges to their mobile operator. Pandora generates revenues from paid subscriptions and also from adverts. It pays royalties to music companies and libraries for streaming the licensed songs. User Base The figure below shows the growth in the number of users accessing Pandora from their mobile phones. Figure 49: Pandora – Mobile User Base 28.0 Mobile User Base (In Million) 30 25 20 13.0 15 10 5 6.0 7.8 2.6 0 Dec-08 Mar-09 May-09 Dec-09 Jun-10 Period Source: Portio Research Ltd. 58 59 Source: http://www.pandora.com/pandora_one Source: http://digg.com/music/Would_You_Pay_99_Cents_per_Month_for_Unlimited_Pandora © 2010, Portio Research. All Rights Reserved 89 Pandora generates revenues from paid subscriptions and also from adverts. It pays royalties to music companies and libraries for streaming the licensed songs.
  • Mobile Applications Futures 2010-2015 Success Factors The table below highlights the factors that have led to the success of the Pandora application in the mobile apps market. Table 30: Success Factors – Pandora Mobile Application Factor Strategy Attractive Pricing To cater to the differing needs of users, Pandora introduced both free and paid versions of the mobile app. The paid version with superior audio quality, faster streaming and no ads is meant for users who value the overall experience and quality. However, users who cannot afford the paid subscription can go for the free version. Understanding Hardware Requirements Hardware limitations play an important role in application adoption. Pandora has understood the hardware requirements, such as a bigger screen size and a headphone jack, and hence targeted Apple’s iPhone, even before its launch. In-House Development Pandora mobile applications are developed in-house, which reduces the turnaround time for incorporating new features. Pandora developers take into account users’ feedback and recommendations, and incorporate them into newer versions. Promotional innovations Pandora has partnered with Facebook and integrates users’ Pandora and Facebook accounts. The integration allows users to add their Facebook friends to their Pandora account, broadcast the music they are listening to through their status messages and help them discover new music through their friends’ music updates. Moreover, this will promote Pandora among the millions of Facebook users. Pandora has also introduced its sidebar gadget for Windows Vista and Windows 7. Source: Portio Research Ltd. Scope of Advertisements With 28 million mobile users, Pandora offers an attractive opportunity to advertisers looking to reach a large group of customers. The size of the mobile audience is comparable to or bigger than the online audience—50 percent or more of all listening on Pandora happens via mobile devices. Cheryl Lucanegro Senior Vice President, Advertising Sales, Pandora Advertisers can profile users based on their musical preferences and target the right set of groups to have a measurable impact. The GPS feature allows advertisers to segment and target users geographically. Textual and audio ads are placed in the free version of the application. Brands such as Kraft, Nike, Dockers, Target and Dominos have used the Pandora application to promote their brands to mobile users. Recent Developments • 90 Pandora applications will be integrated with SYNC API, courtesy of Ford, to enable mobile users to listen to their favourite songs while driving a Ford car. The integrated application will enable users to use voice commands to approve and disapprove a song, switch between stations, create a new station, etc. Users will also be able to use the vehicle’s controls to pause and skip songs. © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Chapter 10 Future Outlook © 2010, Portio Research. All Rights Reserved 91
  • Mobile Applications Futures 2010-2015 Future Outlook Current Growth Phase The uptake of smartphones is soaring worldwide, drawing ever more subscribers to sample and adopt mobile applications. There were over 2.9 billion mobile application downloads in 2009, and this number is forecast to reach 6.7 billion in 2010 and 37.6 billion in 2015. The global revenue from mobile applications (including in-app payments) was USD 3.6 billion at end-2009, and is projected to reach USD 6.6 billion in 2010, before hitting USD 23.3 billion by end-2015. The figure below shows the growth in mobile application downloads and mobile applications revenue. Figure 50: Mobile Application Downloads and Revenue – Worldwide (2009 – 2015F) 30 23.3 20 15.9 12.7 20 37.6 9.5 10 0 25 19.4 30 29.6 6.6 2.9 2009 10 22.6 3.6 16.3 6.7 15 Revenue (In USD Billion) Mobile Application Downloads (In Billion) 40 5 11.1 0 2010F 2011F 2012F 2013F 2014F 2015F Year Mobile Application Downloads (In Billion) Revenue (In USD Billion) Source: Portio Research Ltd. F – Forecasted Social networking and gaming have been the main revenue generators among the mobile application categories. However, navigation and utility apps, such as news alerts and weather information, are also gaining popularity. The mobile applications developer community is growing with the introduction of lucrative business models. Consequently, the number of mobile apps available is experiencing robust growth. The total number of mobile applications available worldwide at end-2009 was approximately 130,000, but by end-August 2010, the Apple store alone had 250,000 applications available. Although Apple has a dominating presence in the mobile apps market, Android is fast catching up. The next figure illustrates the growth in mobile applications available at Apple’s App Store and Google’s Android Market from August 2009 to July 2010. 92 © 2010, Portio Research. All Rights Reserved The global revenue from mobile applications (including in-app payments) was USD 3.6 billion at end-2009, and is projected to reach USD 6.6 billion in 2010, before hitting USD 23.3 billion by end-2015.
  • Mobile Applications Futures 2010-2015 Figure 51: Growth in Mobile Applications Available at Apple’s App Store and Google’s Android Market – Worldwide (In ‘000s, August 2009 – July 2010) 300 245.0 225.0 200 150 77.8 11.9 22.2 31.9 9.6 18.1 26.2 41.3 14.5 Dec/09 Jan/10 Feb/10 Mar/10 50 70.8 Nov/09 100 179.5 196.9 87.2 Oct/09 125.4 161.5 Sep/09 107.5 143.0 Aug/09 Mobile Applications (In '000s) 250 60.4 52.0 66.3 81.6 100.2 Jul/10 Jun/10 May/10 Apr/10 0 Period Apple's App Store Google's Android Market Source: Portio Research Ltd. F – Forecasted Emerging Trends in the Enterprise Segment The mobile applications market is also witnessing growth in the enterprise segment. The major sectors driving the uptake of mobile applications in this segment are: • Communications/media • Distribution/logistics • Financial services/banking/insurance • Manufacturing • Retail Navigation tools, mobile payment applications and productivity tools are the key mobile application features being used to support the above-mentioned sectors. Some examples of the enterprise segment gaining from mobile applications are given below: • Location-based applications help support field service and field sales professionals, and facilitate transportation and shipping • RFID or machine-to-machine (M2M) applications • Mobile alerts for employees and customers • Warehouse and logistics management applications • Payment management • In-store inventory management and retail operation applications • Mobile commerce applications to sell products and services to customers Enterprises may opt for any of the following paths to develop these applications: • In-house mobile application development • Third-party vendors and system integrators • Custom application developers The Road Ahead Developed markets are the early adopters of mobile applications and the youth segment has been the main driver for the growing use of mobile apps. Currently, the top mobile application types are social networking, games, navigation maps (location-based services), news and mobile music. These app types are expected to continue to dominate in terms of © 2010, Portio Research. All Rights Reserved 93
  • Mobile Applications Futures 2010-2015 revenue; however, niche categories such as health, lifestyle, travel and tourism are expected to grow in popularity as, with growing awareness, the uptake of mobile applications percolates from the youth segment to older age-groups. The user base for mobile applications at end-2009 was 38.7 million, accounting for just 0.8 percent of the worldwide mobile subscriber base. The mobile applications user base is forecast to reach 69.1 million by end-2010 and 255.9 million by end-2015. The figure below depicts the adoption of mobile applications among mobile subscribers worldwide. Mobile Application Users (In Million) 300 3.5 3.0 250 3 2.6 200 2.2 1.7 150 2 255.9 1.3 100 213.9 174.9 0.8 1 136.3 50 0 4 100.4 69.1 38.7 Mobile Application Users as a Percentage of Subscriber Base (In Percent) Figure 52: Mobile Application Users as a Percentage of Mobile Subscriber Base – Worldwide (In Percent, 2009 – 2015F) 0 2009 2010F 2011F 2012F 2013F 2014F 2015F Year Mobile Application Users (In Million) Users as a Percentage of Subscriber Base (In Percent) Source: Portio Research Ltd. F – Forecasted The regional scenario of mobile applications uptake is given in the table below. Table 31: Mobile Application Users as a Percentage of Regional Mobile Subscriber Base – Regional (In Percent, 2009 – 2014F) 60 Region Mobile Application Users as a Percentage of Regional Mobile Subscriber Base – Regional (In Percent) 2009 2010F 2011F 2012F 2013F 2014F 2015F Europe 1.1 1.9 2.7 4.0 5.3 6.6 7.8 Asia Pacific 0.5 0.7 0.9 1.0 1.2 1.4 1.6 North America 4.6 8.6 11.7 14.2 16.2 17.4 18.7 ROW 0.1 0.2 0.3 0.4 0.6 0.9 1.3 Worldwide 0.8 1.3 1.7 2.2 2.6 3.0 3.5 Source: Portio Research Ltd. By end-2015, North America is forecast to have the highest penetration of mobile app users, followed by Europe and Asia Pacific. 60 Note: The total of regional percentages may not equal the worldwide figure, as the regional percentages are calculated as regional mobile applications users as a percentage of the regional mobile subscriber base. 94 © 2010, Portio Research. All Rights Reserved The mobile applications user base is forecast to reach 69.1 million by end-2010 and 255.9 million by end-2015.
  • Mobile Applications Futures 2010-2015 Disruptive Technologies Augmented Reality In the mobile applications market, augmented reality is emerging as a potential gamechanger. Augmented reality (AR) is a live artificial machine amplified image of the real physical world that is interactive and loaded with digital information. While it existed in the 1990s, it reached the consumer market in 2009. Augmented reality can contribute to enhancements and innovations in many mobile application categories—with mobile gaming and location-based service applications being the key categories. Mobile gamers will have enhanced experiences with AR-enabled gaming applications. For example, in the game Zombie ShootAR, players can have virtual zombies crawling out of the real world locations seen by the mobile handset. Similarly, location-based services can become more interactive and information rich with AR features. For example, while searching for a location, users will not only be guided to the location, but will also receive location-related information and reviews while on the move. Currently available AR apps include TwittARound, Layar, Nearest Tube, Tatt Augmented ID, SREngine for iPhone, and Wikitude AR (Augmented Reality) travel guide. Cloud Computing Among the various emerging mobile technologies, mobile cloud computing is expected to develop into a disruptive technology capable of transforming the mobile applications market. Mobile cloud computing refers to server-based infrastructure where data storage and data processing for mobile apps happens outside the device, thus eliminating the need for smartphones with high-end software or hardware for storage and computing purposes. This reduces the mobile computing requirements for smartphones. Although, lack of network availability for cloud applications has been a major inhibitor, it has been partially overcome by the development of programming languages such as HTML5. It allows data caching on the device even if there is a momentary network black-out. The synchronisation of cached data happens only for the data that is revised, thus reducing the server load. The enterprise sector is driving further growth in cloud applications. Apps for the enterprise sector provide organisations with beneficial mobile access to their company resources; and enterprise sector apps will contribute significantly to revenues from subscription-based content and mobile advertising. Future of Mobile Application Stores and Business Models The growing mobile application market has opened up possibilities for a number of business models – making the market lucrative for a wide range of parties, be they MNOs, smartphone vendors, developers, payment enablers, or advertisers. Players are coming up with several permutations and combinations by changing the direction of the flow of applications (from developers to users) and revenue (from users/advertisers to developers). Market players will continuously have to develop new features and options to keep up with the changing user demand and adapt according to the changes in technology and payment ecosystem. So far, MNO application stores have been leveraging their existing operator billing system and their direct reach to customers, and have consequently been taking a major part of the revenues generated through app sales. But with growing competition and the need to add variety to their application stores – without which users are likely to explore other available stores – MNO stores will need to invite more developers, and will likely achieve this by offering better and more appealing value propositions to them. Therefore, MNO stores need to lower their share in revenue, which currently ranges between 30 percent and 50 percent. For example, in Japan, MNOs share almost 90 percent of the revenue generated from mobile applications with developers. 61 In the future, the revenue share of developers is expected to increase worldwide. 61 Source: http://www.telecomcircle.com/2009/05/the-economics-of-mobile-application-stores/ © 2010, Portio Research. All Rights Reserved 95 Augmented reality is emerging as a potential game-changer.
  • Mobile Applications Futures 2010-2015 The increased penetration of augmented reality applications, especially in the locationbased service category, is another expected change. MNOs can leverage their network assets to provide high quality AR apps for the location-based category and can therefore earn higher revenue shares from these applications. MNOs also have the advantage of knowing consumer profiles, which can be useful in better targeting mobile apps and embedded advertisements. The arrival of cloud computing technology for mobile devices will help address some of the limitations of smartphones, in terms of storage and computing, by using more capable network technologies. Service providers enabling cloud computing features (emerging players include Amazon Web Services, AT&T, Google, IBM, Microsoft, VMware and Force.com) may enter the mobile applications value chain and take a share of the revenue pie. Although the marketplace looks inviting for developers, they will face stiff competition to get their applications noticed in the flooded applications market. From the consumer perspective, it will be difficult to maintain data sync between different applications from different third party vendors or remembering the passwords, where applicable, for the apps. So, in the near future, a single open framework for third-party vendors is expected to evolve, which will take care of such scenarios. The emergence of cross-device mobile applications is another upcoming trend for third-party stores developing native applications for devices. With players such as PhoneGap, Rhomobile and Appcelerator coming up with open source frameworks, cross-device applications based on common native device capabilities will emerge. 96 © 2010, Portio Research. All Rights Reserved Although the marketplace looks inviting for developers, they will face stiff competition to get their applications noticed in the flooded applications market.
  • Mobile Applications Futures 2010-2015 Chapter 11 Conclusion © 2010, Portio Research. All Rights Reserved 97
  • Mobile Applications Futures 2010-2015 Conclusion Starting with games, mobile applications have made their way in to mobile users’ lives through banking, music, healthcare, transport, social networking and various other services. These apps have extended the capabilities of handsets and have proved their importance in users’ personal and professional lives. While they are helpful in facilitating entertainment, they also provide productivity tools and enterprise applications for business needs. Current Scenario The mobile applications market has evolved significantly in recent years, with the launch of Apple App Store in July 2008 being a key catalyst. The mobile application user base was 13.4 million at end-2007 and increased at a CAGR of approximately 70 percent between 2007 and 2009 to reach 38.7 million at end-2009. Continued growth will see the mobile application user base increase at a CAGR of 37 percent between 2009 and 2015, to reach 255.9 million by end-2015. Factors such as enhanced smartphones driven by growing competition, growing network capabilities, and innovative billing systems are increasing the appeal of mobile apps. Some of the application stores witnessing robust growth in mobile app downloads are Apple App Store, Google Android Market, Nokia Ovi Store, BlackBerry App World, and GetJar. This app download data is depicted in the table below. Continued growth will see the mobile application user base increase at a CAGR of 37 percent between 2009 and 2015, to reach 255.9 million by end-2015. Table 32: Total Mobile Application Downloads for Major Application Stores (In Million, EndJune 2010) Mobile Application Store Launch Mobile Application Downloads (In Million, End-August 2010) Apple App Store July 2008 6,500+ Google Android Market October 2008 1,000+ Nokia Ovi Store May 2009 382.5 BlackBerry App World April 2009 255 GetJar December 2004 105 Source: Portio Research Ltd. App stores are fast expanding their mobile applications portfolio and the availability of applications across various content types is increasing. The situation has become more favourable for users as they can choose from a number of billing options, including operator billing, payment gateways and credit cards. In addition, declining prices of smartphones have made mobile applications accessible to the masses, rather than just the early adopters. Furthermore, applications such as Facebook and Pandora are adding to the growth of the apps market. This increasing popularity of mobile applications has been supported by MNOs efforts in enhancing their networks for data services, as there are several popular applications that require high network speeds for an effective user experience. To this end. MNOs have adopted 3.5G, LTE and WiMAX technologies. 98 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Incentives for stakeholders in the Mobile Applications market The mobile applications market benefits stakeholders in many ways. The figure below depicts the key incentives for different stakeholders, which have resulted in them entering the mobile applications market in large numbers. Figure 53: Incentives for the different stakeholders MNOs • Mobile applications provide MNOs with an additional data-based revenue source. • The popularity of applications improves customer loyalty for the operator. • It is indirect marketing for operators. Smartphone Vendors • Support for popular applications is counted as additional features. • Distinguishing factor from competition creates brand image. OS/Platform providers • It increases the replacement rate for smartphones; new features and upgrades are aimed at providing a better user experience. • It increases the stickiness of developers to a particular platform. Developers • Low investment with high return is observed from mobile applications; this is becoming an attractive field for start-ups. Aggregators • They generate revenue from advertisements in the expanding mobile advertising space. Source: Portio Research Ltd. Market Response With the increasing popularity of mobile applications and the incentives involved, the market has responded well, with a steep increase in the number of application stores – to the point where the opening of a store by a device manufacturer, OS provider, or MNO is a near-daily occurrence. The next figure depicts the increase in the number of mobile application stores between December 2009 and July 2010. © 2010, Portio Research. All Rights Reserved 99
  • Mobile Applications Futures 2010-2015 Number of Mobile Applications Stores Figure 54: Growth in the Number of Mobile Applications Stores (December 2009 – July 2010) 100 85 76 80 57 60 40 27 20 0 Dec-09 Mar-10 Jun-10 Jul-10 Period Source: Wireless Industry Partnership, Portio Research Ltd. The rapid growth of the mobile applications market increases the data traffic volumes and demand for high data transfer rates. For example, online gaming or video/TV streaming apps require data transfer rates ranging between 1 Mbps and 10 Mbps. As a result, MNOs are required to upgrade their networks to enhance network data capacities. Device manufacturers also need to improve the data transfer capacity of devices. Operating system or platform providers are required to deliver better and more efficient Application Programming Interfaces (APIs) in mobile platforms, to support the data intensive interaction between the network assets and the device assets for the apps to function smoothly. Market Diversification – A Move to Alternate Devices The mobile apps arena has not yet reached maturity, but app providers have already started exploring newer areas. The phenomenal success of mobile applications is motivating providers to offer innovative and augmented apps to diversified markets. The app developers are producing newer applications, not only for smartphones but also for cars and projectors, which can be controlled using mobile handsets. With the introduction of applications for alternate devices, the installed device base will increase significantly which will further increase the horizon and prospects of the mobile applications market. Mobile apps for several types of devices will help providers to target different user segments and improve their reach to a larger user base. Motor companies, such as Ford and Toyota, have taken initiatives to enable their users to easily access smartphone applications while driving. With the integration of mobile applications with the car’s API, such as SYNC, users will be able to navigate through smartphone applications using voice-commands and car controls. Application developers and car companies are jointly working to offer a variety of apps to users, such as streaming music, location-based services, news and social networking, performance indicator calculators, and locking and unlocking the car. In addition to vehicles, mobile applications are being integrated with projectors, which allow users to connect smartphones with projectors and project required images and content. With developments targeted at expanding the scope of mobile applications to diverse devices, it is not hard to imagine a situation when app stores might also be catering to the users of HDTVs, Blu-ray players, home theatres and other devices; since horizontal diversification of this kind would make sound business sense. 100 © 2010, Portio Research. All Rights Reserved With the introduction of applications for alternate devices, the installed device base will increase significantly which will further increase the horizon and prospects of the mobile applications market.
  • Mobile Applications Futures 2010-2015 Chapter 12 Appendices © 2010, Portio Research. All Rights Reserved 101
  • Mobile Applications Futures 2010-2015 Appendices This market study has been written in a way that avoids excessive use of market acronyms (except where appropriate) and industry technical talk, as we have tried to keep the text open to all readers, not just those with in-depth knowledge of the world’s mobile markets. Because this study covers all geographical regions and many emerging markets, a great deal of the data contained within this study will potentially be of interest to investors, financial analysts, consultants, venture capitalists and others all around the world who do not work within the mobile industry itself every day of their lives. To many of these people, some of the industry technical talk and acronyms may be confusing, so we have attempted to write this study in a self explanatory way that assumes little prior knowledge, but in doing this, some of the speech chosen may seem somewhat "obvious" to our more knowledgeable readers. We hope this offers the best possible solution to everyone, and we hope this does not cause any confusion or inconvenience. Where we have used technical terms or acronyms, we offer an explanation of those expressions below. 102 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Glossary 2G or Second Generation Packet Data Networks The second-generation packet networks recently introduced consist of combined voice and packet data networks based on global standards. 2.5G 2.5G describes the state of wireless technology and capability usually associated with General Packet Radio Services (GPRS) - that is, between the second and third generations of wireless technology. The second generation or 2G-level of wireless is usually identified as Global System for Mobile (GSM) service and the third generation or 3G-level is usually identified as Universal Mobile Telecommunication Service (UMTS). Each generation provides a higher data rate and additional capabilities. There is also a fourth generation (4G) of technology in the planning and research stages. 2.5G protocols extend 2G systems to provide additional features such as packet-switched connection (GPRS) and enhanced data rates (HSCSD, EDGE). 3G or third generation 3G is an International Telecommunication Union (ITU) specification for the third generation (analog cellular was the first generation and digital PCS 62 was the second generation) of mobile communication technology. Third generation Wireless Wide Area Networks (WWAN) communication systems are characterised by high-speed data rates (144 Kbps 63 to 2+ Mbps 64) suitable for multimedia content. 3G technologies typically are packet-switched and use Code Division Multiple Access (CDMA) technology to communicate. Examples of 3G include EDGE 65, 1xRTT, HDR and W-CDMA. 66 3G protocols in mobile telephony support higher data transmission rates, measured in Mbps, intended for applications other than voice. 3G support broadband and bandwidth applications, such as full-motion video, video conferencing and Internet access. 3G as a Percentage 3G as a percentage refers to 3G subscribers as a percentage of total active mobile subscribers in a country. This represents the proportion of 3G subscribers in the total mobile subscriber base of a country. 3G Penetration 3G penetration refers to 3G subscribers as a percentage of total population of the country. This is similar to the term ‘mobile penetration’, which means total number of active mobile subscribers in a country as a percentage of total population of the country. 4G or fourth generation 4G or fourth generation WWAN communication systems are characterised by high-speed data rates at 20+ Mbps, suitable for high-resolution movies and television. The initial deployment of 4G communication systems is expected in 2006-2010. The proposed features of these systems include 100 Mbps speed, location sensing and self-tailoring to user needs. A2P Application-to-Peer: In the mobile messaging world A2P messages are defined as messages generated by an application and sent to subscribers, for example, the advertisements sent through SMS/MMS on subscribers’ handsets. 62 Personal Communications Service (PCS) Kilobits per second (Kbps) 64 Megabits per second (Mbps) 65 Enhanced Data for Global Evolution (EDGE) 66 Wideband Code Division Multiple Access (W-CDMA) 63 © 2010, Portio Research. All Rights Reserved 103
  • Mobile Applications Futures 2010-2015 AAC Advance Audio Coding: It is an advanced audio compression algorithm used for downloading music files, streaming video, audio and satellite-radio applications. Application Programming Interface (API) It is an interface implemented by a software program to communicate with other software. Operating systems and applications use API to determine the way to call or send requests to other software. Augmented Reality (AR) Augmented reality is the superimposition of virtual content over the real time environment. Virtual content includes digital graphics, audio and other sense enhancements, which are augmented to the real world by an AR device. Average Revenue per User (ARPU) Measures the average monthly revenue generated for each customer unit, such as a handset or pager that an operator has in operation. Backhaul It refers to the process of transmitting voice and data traffic from a remote site to a central site. BREW Binary Runtime Environment for Wireless: It is an application development platform developed by Qualcomm. It enables wireless users to download and run applications, such as enhanced e-mail, location positioning, games, etc., to BREW-enabled handset. BREW was first introduced and developed for CDMA handsets, but it now supports GSM/GPRS and UMTS handsets as well. BTS Base Transceiver Station: It is the equipment that facilitates the wireless communication between user equipment such as mobile handsets, computers etc., and the mobile network. Broadcast Technologies for Mobile TV Some of the broadcast technologies for mobile TV worldwide are: DVB-H 67 (Digital Video Broadcast – Handheld): DVB-H technology allows simultaneous broadcast of television, video and radio channels on mobile, and helps operators to preserve network bandwidth for other data and voice services. It has been accepted as the standard by the European Telecommunications Standards Institute (ETSI). ISDB-T (Integrated Services Digital Broadcast – Terrestrial): It is the transmission standard that has been developed in Japan to help the radio and television stations support digital content. DMB (Digital Media Broadcast): It is a transmission standard, which transmits video feed via satellite (S-DMB) or terrestrial (T-DMB) mode. The standard is currently deployed in Korea and is being increasingly used in other parts of Asia as well as Europe. MBMS (Multimedia Broadcast/Multicast Service): This standard allows the transmission of multimedia content over the UMTS and GSM network. 67 Source: http://www.strategiy.com/inews.asp?id=20041127000355 104 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 BWA Broadband Wireless Access: It is a form of fixed wireless access system. Byte Byte is a collection of bits in which each bit can take a value of either 1 or 0. Kbps, Mbps and Gbps denote the number of bytes transferred per second; Kbps, Mbps and Gbps translate to 103, 106 and 109 bytes per second respectively. CAPEX Capital Expenditure: It refers to the cost of developing a product or system. CDMA Code Division Multiple Access: In a CDMA system, each voice circuit is labelled with a unique code and transmitted on a single channel simultaneously along with many other coded voice circuits. The receiver uses the same code to recover the signal from the noise. CDMA2000 1x CDMA2000 1x: This is regarded as the first phase of CDMA2000 technology used for providing voice and data services over mobile networks. Data speeds of 307kbps are using a single channel while with two channels speeds of 614kbps are possible. Churn Rate It is the rate at which the subscribers cancel their subscription with the existing operator and sign up with another operator. Cloud Computing Cloud computing is a technology involved in delivering hosted services on the Internet. It is based on client-server architecture, which includes user device with applications (such as Web browsers) to access the back end (various components, such as data storage devices, servers, etc.). The back end components perform specific tasks and interact with each other through standard application programming interfaces. DoJa It is a JAVA-based technology/application developed for DOCOMO's i-mode mobile handset. It allows users to access more interactive applications or content than the conventional HTML-based i-mode content. Dongle Dongle is a portable device which is connected to a laptop or desktop and resembles a USB flash drive. It is widely used as a wireless broadband adapter. DRM Digital Rights Management: It refers to a set of technologies used for the administration of digital content. It authorises the nature and restricts the frequency of the usage based on the administrative policy settings. It sustains the revenue of the mobile network operator by regulating the usage of content at end user. DSL Digital Subscriber Loop: It is a technology that provides digital data transmission over the copper lines of a PSTN network. Dumb Pipes Dumb pipe refers to a mobile operator’s wireless network being used only to transfer data/bytes between the Internet and the user’s device. For an operator being a dumb pipe, there is a potential loss of revenue for the operator, since the operator is generating revenue only for the network data access and is not receiving any significant share in data/content service revenue. © 2010, Portio Research. All Rights Reserved 105
  • Mobile Applications Futures 2010-2015 EDGE Enhanced Data rates for Global Evolution: An enhanced modulation technique designed to increase network capacity and data rates in GSM networks. EDGE should provide data rates up to 384 Kbps. EDGE will let operators without a 3G license compete with 3G networks offering similar data services. EV-DO Evolution Data Only, Evolution Data Optimised: It is a wireless radio broadband data protocol being adopted by many CDMA operators. It is being used as a part of CDMA2000 networks in Japan, Korea, the United States and Canada. It provides better data speeds in comparison to GSM technologies such as GPRS and EDGE. FDMA Frequency Division Multiple Access is a channel access protocol that allows a user dedicated allocation to single or multiple frequency bands. Feature Phone Feature phones are handsets with browsers (primarily based on embedded J2ME and BREW platforms) to enable access to web based e-mail, and sometimes have embedded applications for social networking, instant messaging (IM) and mobile banking. These phones often come with high resolution cameras, GPS and innovative multimedia features. The major differentiating factor between a smartphone and a feature phone is that feature phones do not have an open Operating System (OS). The OS present in smartphones, through its Application Programming Interface (API), enables subscribers to install and remove third-party applications. Smartphones are better integrated with the handset's User Interface than Java applications. Freemium Freemium is a strategy adopted by application stores in which trial or lite versions of premium apps are offered for free or for a small charge; and users have an option to upgrade the apps with additional features by paying additional charges. Gbps Please see “Byte”. GPRS General Packet Radio Service (GPRS) is a packet-based standard for mobile communication, which runs at speeds up to 115 kilobits per second, compared with GSM systems' 9.6 kilobits per second. GPRS supports a wide range of bandwidths and makes efficient use of limited bandwidth. It is particularly suited for sending and receiving small bursts of data, such as e-mail and web browsing, as well as large volumes of data. Applications for GPRS may include any of the following: chat, text and visual information, still images, moving images, web browsing, document sharing/collaborative working, audio, job dispatch, corporate e-mail, Internet e-mail, vehicle positioning, remote Local Area Network (LAN) access, file transfer or home automation. GSM Global System for Mobile communications, the most widely used digital mobile phone system and the mobile telephone standard in Europe. It was originally defined as a panEuropean open standard for a digital cellular telephone network to support voice, data, text messaging and cross-border roaming. GSM is now one of the world's main 2G digital wireless standards. GSM is present in more than 160 countries and according to the GSM Association, accounts for approximately 70 percent of the total digital cellular wireless market. GSM is a time division multiplex (TDM) system. Implemented on 800, 900, 1800 and 1900 MHz frequency bands. 106 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 GUI Graphical User Interface (GUI) is the front-end interface and navigation design of an application. This includes standard formats for representing text and graphics. GUIs have become the standard ways for interaction between users and digital devices. HARQ Hybrid Automatic Repeat Request is a process of ensuring data transmission even in poor signal conditions with an adverse effect of lowering the throughput in better signal conditions. It does so by error-correction in addition to error detection in the transmitting bits. HSPA High Speed Packet Access comprises two mobile protocols: High Speed Downlink Packet Access (HSDPA) and High Speed Uplink Packet Access (HSUPA). These protocols enhance the performance of WCDMA protocols. HTML Hyper Text Mark-up Language: It is a syntax based language used for designing web pages. The content of HTML, written in standard syntax, when opened in a web browser takes the form of Web page. The nascent version of HTML was used with easy syntax rules in comparison to existing HTML and MHTML versions of it. In recent times, the official standards of World Wide Web recommend Web developers to use XHTML 1.1, XHTML 1.0 and HTML 4.01 versions. i-mode i-mode is a proprietary packet-based information service for mobile handsets. It delivers information (such as mobile banking, and train timetable) to handsets and enables exchange of e-mail from mobile handsets on the PDC-P network. Launched in 1999 by NTT DOCOMO, i-mode is very popular in Japan (especially for e-mail and transfer of icons). IMPS IMPS (Instant Messaging and Presence Service) is an instant messaging system designed for mobile environments. Presence refers to the availability of a user for communication. IMS IMS IP Multimedia Subsystem is an extension of the GSM / 3GPP GPRS core Network. It uses SIP (Session Initiation Protocol) to set up, maintain and terminate packet-switched voice and multimedia sessions. Interoperability This is defined as the ability of a network to operate with other networks, such as two systems based on different protocols or technologies. In-app Payment In-app payment is the payment made by mobile user to get privileged features, services or digital goods while using mobile apps. The privileged feature may be moving from a free or lite version of an app to the full version. Instant Messaging (IM) Instant Messaging is an Internet-based service that alerts users when their friends or colleagues are online and allows them to communicate with each other in real-time through private online chat areas. With instant messaging, users create a list of other users with whom they want to communicate. When a user from their list is online, the service alerts them and enables an immediate contact with the other user. While instant messaging has primarily been a proprietary service offered by Internet service providers such as AOL and MSN, businesses are starting to employ instant messaging to increase employee efficiency and make expertise more readily available to employees. © 2010, Portio Research. All Rights Reserved 107
  • Mobile Applications Futures 2010-2015 Integrated Mobile Broadcast (IMB) It is a 3GPP Release 8 Standard that empowers MNOs to offer Multimedia Broadcast Multicast Services in a spectrally efficient manner in the 3G TDD bands. It is deployed existing 3G FDD unicast technology. Intranet The intranet is a private network inside a company or an organisation, and uses software similar to that used on the Internet. Companies use intranets to manage projects, provide employee information, distribute data and information, etc. J2ME Java2, Micro edition: The Micro Edition of the Java 2 Platform provides an application environment that specifically addresses the needs of commodities in the vast and rapidly growing consumer and embedded space, including mobile handsets, pagers, personal digital assistants, set-top boxes, and vehicle telematics systems. Java A simple platform-independent object-oriented programming language used for writing applets that are downloaded from the World Wide Web by a client and run on the client's machine. Kbps Please see “Byte”. LTE Long-Term Evolution (LTE) is the standard being developed by 3GPP to achieve download rates of 100Mbps, and upload rates of 50Mbps for every 20MHz of spectrum and is termed as a 4G standard. LTE has support for bandwidths ranging from 1.25MHz to 20MHz. LTE Commitments LTE commitments cover announcements from service providers about conducting trials and deployments for LTE networks. LTE Deployments LTE deployments refer to the successful launch of LTE services in a market by a service provider. LTE Engagements LTE engagements refer to the collaborations between service providers and infrastructure vendors to conduct LTE trials and deployments. An LTE trial or deployment may consist of more than one engagement. For example, TeliaSonera selected Ericsson and Nokia Siemens Networks for its LTE roll-out in Norway. In this case, one LTE deployment accounted for two LTE engagements. LTE Subscriber Base as a Percentage of Total Mobile Subscribers LTE subscriber base includes the subscribers using LTE services through dongles and handsets. LTE subscriber base as a percentage of total mobile subscribers refers to the percentage of mobile subscribers who use LTE services. M2M Machine-to-Machine: M2M generally means the communication between machines. However, in the mobile world, it is sometimes defined as Mobile-to-Mobile, which basically refers to communication that involves only mobiles and not landlines. MAN Metropolitan Area Network is a computer network that normally encompasses a city or a big premise. It is formed by connecting several local area networks. 108 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Mbps Please see “Byte”. MiFi MiFi is a collection of wireless routers that are used as mobile Wi-Fi hotspots. The technology is developed by Novatel Wireless. MIMO Multiple-Input and Multiple-Output refers to the use of more than one antenna at the transmitter and receiver end to enhance the communication process. Mobile Broadband Users as a Percentage A mobile broadband user as a percentage refers to mobile broadband users as a percentage of total active mobile subscribers in a country. This represents the proportion of mobile broadband users in the total mobile subscriber base of a country. MNO Mobile Network Operator. MNO market penetration It is the mobile subscriber base of an MNO expressed as a percentage of total population of the country of operation. Mobile penetration It is the mobile subscriber base in a country expressed as a percentage of its total population. Modem A modem is a device which modulates and demodulates analogue and digital signals for the transmission of signals over different carriers. MVNO Mobile Virtual Network Operator: Term used for a mobile operator who does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNOs have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers. Native Apps Native apps are mobile applications developed specifically to run on a particular operating system or device. Near Field Communication Near Field Communication (NFC) is a wireless communication technology which uses shortrange high frequency to enable the exchange of data between devices in proximity with each other. The distance between the communicating devices has to be less than 10 centimetres. NFC-capable devices can communicate with smartcard readers as well as other NFC-capable devices. Node - B It is a term used in Universal Mobile Telecommunications System (UMTS) to refer to the Base Transceiver Station (BTS). ODM An original design manufacturer (ODM) is a firm involved in designing and manufacturing a product according to specifications provided by another firm. The products are sold under the brand of the firm which gives the manufacturing contract to the ODM. © 2010, Portio Research. All Rights Reserved 109
  • Mobile Applications Futures 2010-2015 OEM An original equipment manufacturer (OEM) is a firm which acquires a product (or a component) for reuse or incorporation into the products branded under its name. OFDMA Orthogonal Frequency Division Multiple Access is an advancement of Orthogonal Frequency Division Multiplexing to support mobile networks with more flexibility. Subsets of the subcarriers are assigned to individual users to facilitate multiple access. OMA-IMPS Open Mobile Alliance-Instant Messaging and Presence Service: It is an open mobile alliance enabler for instant messaging and presence. The first cut of this specification was developed by the Wireless Village consortium. OPEX Operating Expenditure: It refers to the ongoing costs for running or operating a product or system. OPhone OPhone is a mobile operating system developed by China Mobile. It runs on Linux kernel and is based on Google Android’s Open Mobile System (OMS) operating system. Over-the-Top Services Over-the-top services refer to those services which are available to users over mobile networks without MNOs being involved in planning, provisioning and selling them. Packet Data Packet data is a method of transmitting information in small packets each containing a certain amount of the information. Packet data networks allow transmission of high-speed data to and from devices connected to the network. Packet Data is similar to dial-up Internet access available in homes or in businesses with cable modems, ADSL 68 lines, etc. P2P Peer-to-Peer: In the mobile messaging world, P2P messages are defined as messages exchanged between subscribers. These messages originate from and terminate to mobile subscribers’ handsets. PCS networks Personal Communications Service Networks: In the U.S., the 1.9 GHz band has been allocated for PCS systems; the allocated spectrum is 120 MHz wide and is licensed as two 30 MHz segments for the 51 major trading areas, and three 10 MHz segments for the 493 basic trading areas. PDA Personal Digital Assistant: A portable computing device capable of transmitting data. This device makes possible services such as paging, data messaging, electronic mail, computing, facsimile, date book and other information handling capabilities. PDC This stands for Personal Digital Cellular, a Japanese cellular standard. PHS system This stands for Personal Handy phone system, a Japanese cordless standard. 68 Asymmetric Digital Subscriber Line (ADSL) 110 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 PIM Personal Information Manager: Also known as a "contact manager," is a form of software that logs personal and business information, such as contacts, appointments, lists, notes, occasions, etc. QoS QoS stands for quality of service. RAN Radio Access Network: It is a component that exists between the mobile handset and the core network. It performs the radio functionality of the network and provides connection to the core network. RFID Radio frequency identification (RFID) denotes a system employed to convey a unique serial number using radio waves. It does not require contact or line of sight for communication. An example of the deployment of this technology is in electronic toll collection using RFID tags. SC-FDMA Single-carrier frequency-division multiple access (SC-FDMA) facilitates multiple access schemes and is used for assigning multiple users to a shared communication resource. While in OFDMA, subsets of the subcarriers are assigned to individual users to assist multiple access schemes, SC-FDMA enables a single-carrier transmission scheme. SDK Software Development Kit is a set of tools used for the development of an application for a software package. Service Revenue Service revenues are the revenues earned by MNOs through the provision of services only, i.e. revenues after deducting revenues earned from sales of equipment/products. SIM card It is a smart card that gives GSM handset its user identity. The card is inserted into a GSM/TDMA or GSM-only mobile handset containing subscriber-related data. The card contains 18 digits code for GSM markets and 20 digits code for TDMA markets. SIM Toolkit Subscriber Identity Module Application Toolkit: It is used by network operators to provide a user friendly interface on a subscribers’ handset to access value-added services provided by them. These applications also provide a mechanism for storing and using any service specific parameters. These applications are built within a SIM card by mobile network operators. SIMPLE SIMPLE (Session Initiation Protocol for Instant Messaging and Presence Leveraging Extensions) is an open standard instant messaging (IM) protocol. SIP Session Initiation Protocol or SIP is a standard multimedia and telephony protocol for initiating an interactive user session over mobile networks. The services under SIP may include call forwarding, number delivery, authentication and other telecoms applications. Smartphone A smartphone is a mobile handset which runs on operating system (OS) software and offers some of the capabilities of a PC. It provides a standardised interface and platform for application developers and is enabled with advanced features, such as e-mail, Internet and © 2010, Portio Research. All Rights Reserved 111
  • Mobile Applications Futures 2010-2015 an e-book reader. Some of the other features expected from a smartphone include built-in full keyboard/external USB keyboard, powerful microprocessors, memory, built-in modem and large screens. The major differentiating factor between a smartphone and a feature phone is that an open Operating System (OS) is present in a smartphone. The OS, through its Application Programming Interface (API), enables subscribers to install and remove thirdparty applications. Smartphones are better integrated with the handset's User Interface than Java applications. SMS TV This is defined as the use of SMS for variety of applications, such as voting, teletext chat for TV programmes. SMSC Short Message Service Centre (SMSC) provides the routing of all SMS or text messages in any mobile network. Similar to e-mail server, the SMSC handles large volumes of messages sent between two mobile handsets or a mobile handset and a software application. Spectrum Allocation The use of radio frequency electromagnetic spectrum in a country is regulated by government bodies who then allocate spectrum to telecom companies. The license for using a particular spectrum is typically awarded following a bidding process. There are certain guidelines for using the allocated spectrum which service providers must adhere to — including a minimum quality of service, and roll-out timelines for the services for which the license has been issued. SS7 SS7 is a global standard for telecommunications defined by ITU Telecommunication Standardisation Sector (ITU-T). The standard defines the procedures and protocol by which network elements in the public switched telephone network (PSTN) exchange information over a digital signalling network to effect mobile (cellular) and wire-line call setup, routing and control. TDD Time Division Multiplex: This is a scheme for allowing simultaneous transmission and receiving of data at the same frequency, but with the different time slots allocated to them. TDMA Time Division Multiple Access: A TDMA channel is a single FDMA channel divided up in time into multiple time slots. TDMA system is able to transmit multiple voice circuits per channel. Three users can take it in turn to share one radio channel. The channels can vary in bandwidth and depending on the type of system, the time slots can transmit all or part of a voice circuit. Each user's speech is stored, compressed and transmitted as a quick packet, using controlled time slots to distinguish them-hence the phrase 'time division'. It uses 30 KHz channels and a vocoder rate of 8 Kbits/sec. At the receiver, the packet is decompressed. TD-SCDMA Time Division Synchronous Code Division Multiple Access: It is an air interface used in UMTS mobile telecommunications networks. It has been deployed in China to replace WCDMA technology. Thin Client Thin Client refers to a client computer or client software in client-server architecture networks. The primary purpose of Thin Client is to convey input and output between the user and the remote server. 112 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 UMTS Universal Mobile Telecommunications System: This is the future transmission network for third generation mobile telephones, as defined by the International Telecommunications Union (ITU). In time, UMTS could reach transmission capacities of 2 Mbits/sec. (compared to 9.6 Kbits/sec. for GSM). Initially UMTS will offer rates of 144 to 384 Kbits/sec. This standard will make the development of new multimedia services having very wide bands and new uses, notably in the transmission of video, images and sound possible. UMTS TDD Universal Mobile Telecommunication System (UMTS) Time-Division-Depleting (TDD): UMTS TDD Mobile Broadband technology is a packet data implementation of the international 3GPP UMTS standard and is designed to work in a single unpaired frequency band. It is designed to generate typical data transfer rates of up to 2 Mbps. UMTS FDD Universal Mobile Telecommunication System (UMTS) Frequency Division Duplex (FDD): It is designed to generate typical data transfer rates of up to 384 Kbps and is suitable for wide area coverage due to potentially high reach. USB Universal Serial Bus is a specification used to initiate data transfer between devices and a host controller. USSD Unstructured Supplementary Service Data (USSD) is a standard for transmitting information over GSM networks. It is primarily used to access the information on prepaid balances and similar details. VAS Mobile operators offer various services which are not part of the basic voice offer. These services are availed off separately by the mobile subscribers. It includes services such as SMS, MMS, mobile e-mail, mobile games, mobile music etc. These also include services such as WAP, voicemail, call diversion, etc. vCalender It is a standard format used to exchange information about schedules and activities electronically via an e-mail attachment. vCalender requires a personal information manager (PIM) type of application program. The format was developed by a consortium founded by Apple, AT&T, IBM and Siemens. vCard vCard is an electronic business card used for exchanging personal information digitally. It contains name, address information, company logos, URLs, photographs and sound clips. It was developed by a consortium founded by Apple, AT&T, IBM and Siemens. Vertical Devices Vertical devices are smartphones optimised to run mobile enterprise applications and are particularly useful for a mobile work fleet. These devices are designed to provide highbandwidth data collection and enable employees to access and update enterprise databases in a real-time environment. Aside from powerful processors, vertical devices are often enabled with capabilities such as a bar code scanner, digital camera, and two-way radio. WAP Wireless Advance Protocol: WAP is a specification for a set of communication protocols to standardise the way mobile devices, such as handsets and radio transceivers, can be used for Internet access. The WAP standard is based on Internet standards (HTML, XML and © 2010, Portio Research. All Rights Reserved 113
  • Mobile Applications Futures 2010-2015 TCP/IP). It consists of a Wireless Markup Language (WML) specification, a WMLScript specification, and a Wireless Telephony Application Interface (WTAI) specification. The WAP protocol is the leading standard for information services on wireless terminals such as digital handsets. Some examples of WAP for accessing information include the following: checking train timings, purchasing tickets, flight check-in, viewing traffic information, checking weather conditions, looking up stock values, looking up phone numbers, looking up addresses or looking up sport results, and there are countless more. W-CDMA Wideband Code Division Multiple Access: The third generation standard offered to the International Telecommunication Union by GSM proponents. This is a 3G technology that increases data transmission rates in GSM systems by using CDMA instead of TDMA. W-CDMA has become the Direct Sequence mode in the ITU's 3G specification which includes the 1x Multi-Carrier mode (1x MC) and 3x Multi-Carrier mode (3x MC). 1x MC (formerly known as cdma2000) and 3x MC comprise the 3G upgrade paths for operators already using CDMA. WiBro Wireless Broadband: The technology was formulated by South Korean telecom industry as an equivalent to mobile WiMAX international standard. Wi-Fi Wireless Fidelity: It is used to provide wireless local area network through enhanced interoperability of the network. Services such as Internet, VoIP phone access, and gaming, etc., can be provided using Wi-Fi. WiMAX Worldwide Interoperability for Microwave Access: It is a telecommunication technology used for wireless data transfer over long distances through point-to-point links as well as mobile cellular type access. It is based on standards that are useful in wireless broadband access. Wireless MAN Wireless Metropolitan Area Network: The technology is used to provide wireless network over a larger area as compared to local area network. WLL Wireless Local Loop: It refers to the wireless devices that are situated in fixed locations. The signal transmissions occur through the air and it provides connectivity to the users in remote and isolated areas without the need for laying new cables. 114 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Portio Research Classifications Geographical Regions: There is sometimes a difference in the way research firms classify the major geographical territories. At Portio Research, we follow 'obvious' geographical lines, but for the record, here are the regional definitions we follow, unless otherwise stated in the report: Western Europe: Standard classification includes Iceland and various islands Central and Eastern Europe: Includes standard list of Central and Eastern European countries, and the Baltic states, Balkans, Russia, Greece and Turkey Asia Pacific: Includes Australasia, the Indian Sub-Continent, Pakistan, Afghanistan, Sri Lanka, Maldives and the Former Soviet Union Central Asian republics North America: Standard classification, including Hawaii and islands to the North Latin America: Includes all South and Central American countries including Mexico, The Caribbean and The West Indies Middle East: Includes Israel and all Middle Eastern countries East of Egypt, South of Turkey and West of Afghanistan Africa: Standard classification includes territories in Western Indian Ocean Mobile Subscribers Generally, we count active SIMs, and we consider active as being used within 3 months, but, of course there is some room for variance, depending on what figures operators themselves publish or report to us when we interview them. When running spot-checks on operator numbers, we are governed by the figures they give us, and as we are all aware, many individuals and companies around the world count their subscribers/subscriptions by a number of different criteria. We refer to "total subscribers" for a network/country or globally, as a count of the total number of active subscriptions those networks have, and as such this can cause a slight distortion of any country-penetration rate. Currency and Monetary Values All monetary values quoted in this report are in US Dollars as the most widely recognised benchmark internationally. The currency conversion has been done on the year average basis. Whilst researching global mobile markets, we use http://www.oanda.com/ for all currency conversion calculations. © 2010, Portio Research. All Rights Reserved 115
  • Mobile Applications Futures 2010-2015 Companies Mentioned in this Report Company Amazon www.amazon.com AndAppStore www.andappstore.com AppBrain www.appbrain.com Appcelerator www.appcelerator.com Appcity www.appcity.com AppComments.com www.appcomments.com Apple www.apple.com Appoke www.appoke.com Appolicious www.appolicious.com Appsfire www.appsfire.com AppsLib www.appslib.com AppStoreHQ.com www.appstorehq.com AppUp Center www.appup.com AT&T www.att.com Bharti Airtel www.airtel.in BOKU www.boku.com BoostApps www.boostapps.com Camangi Market www.camangimarket.com Cellmania www.cellmania.com China Broadcast Corp www.bcc.com China Mobile www.chinamobileltd.com Clickgamer www.clickgamer.com Crackberry www.crackberry.com Dell www.dell.com Deutsche Telekom www.telekom.com Distimo www.distimo.com Dockers www.us.dockers.com Dominos 116 Website www.dominos.com © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Company Website Facebook www.facebook.com FastApp Store www.fastappstore.com Ford www.ford.com Fortumo www.fortumo.com GetJar www.getjar.com Google www.google.com Handango www.handango.com Handmark www.handmark.com Handster www.handster.com Hisence www.hisense.com HTC www.htc.com IBM www.ibm.com Idea www.ideacellular.com Kero Mobile www.biskero.com Lenovo www.lenovo.com LG Electronics www.lg.com M1 Singapore www.m1.com.sg Microsoft www.microsoft.com Mikandi www.mikandi.com Mobango www.mobango.com MobiHand www.mobihand.com Mobile Telesystems(MTS) www.mtsgsm.com MobileIron www.mobileiron.com MobileRated www.mobilerated.com MobileWorxs www.mobileworxs.co.uk Mobspot www.mobspot.com Motorola www.motorola.com Movistar www.movistar.com Mplayit www.mplayit.com © 2010, Portio Research. All Rights Reserved 117
  • Mobile Applications Futures 2010-2015 Company MySpace www.myspace.com neXva www.nexva.com Nike www.nike.com Nokia www.nokia.com O2 www.o2.co.uk Opera www.opera.com Optus www.optus.com.au Orange www.orange.com Palm www.palm.com Panasonic www.panasonic.com Pandora www.pandora.com PayPal www.paypal.com Phoload www.phoload.com PhoneGap www.phonegap.com PocketGear www.pocketgear.com Rcom www.rcom.co.in Research In Motion www.rim.com Rhomobile www.rhomobile.com Salesforce www.salesforce.com Samsung www.samsung.com Sharp www.sharpusa.com SK Telecom www.sktelecom.com SoftBank www.softbank.jp Sony Ericsson www.sonyericsson.com Sprint www.sprint.com Target www.target.com TCL www.tcl.com Telefonica www.telefonica.com TIM 118 Website www.tim.it © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Company Website T-Mobile www.t-mobile.com Turkcell www.turkcell.com Twitter www.twitter.com Verizon Wireless www.verizonwireless.com Vmware www.vmware.com Vodafone www.vodafone.com Vonage www.vonage.com whiteapp www.whiteapp.com YouTube www.youtube.com Yulong www.yulong.com zanox www.zanox.com ZTE www.zte.com © 2010, Portio Research. All Rights Reserved 119
  • Mobile Applications Futures 2010-2015 About the Authors Nishi Verma Nishi Verma is working as a Manager with Portio Research and Evalueserve. She has worked on various projects related to telecom and media domain. She has been working with Portio Research since February 2010. Sudhir Kumar Sudhir Kumar is working as a Senior Business Analyst with Portio Research and Evalueserve. He graduated from NIT Jalandhar, India. He has been working with Portio Research and Evalueserve since April 2010. Radhika Goel Radhika Goel is working as a Senior Business Analyst with Portio Research and Evalueserve. She post-graduated in Business Management from IMI, India. She has been working with Portio Research since April 2010. John White John White has been Editor and contributing author for this report. John is Business Development Director for Portio Research and has over 18 years experience in the technical publishing industry. Working in the IT sector previously and in the telecoms industry for the last 12 years, John has extensive experience in the mobile sector. 120 © 2010, Portio Research. All Rights Reserved
  • Mobile Applications Futures 2010-2015 Also available from Portio Research Limited Portio Research Ltd is a UK-based research company focussing on the mobile space, providing reports, handbooks, directories and database products. New and Best Selling Reports include: LTE and the Road to 4G 2010-2015: With analysis and growth forecasts, this essential new 82-page study covers the current state of Long Term Evolution (LTE) at worldwide and regional levels, discusses the drivers and inhibitors for LTE growth, reviews the LTE network infrastructure vendor landscape, and examines the future outlook for this highly-promising 4G enabling technology. The report also includes analysis of the expected trends in technology adoption, the planned trials and deployments by MNOs worldwide, draws comparisons between LTE and WiMAX on several fronts, and much more. Please click here for more details. Strategies for Driving Mobile Data and Broadband Adoption: The latest report in our highly popular series analysing best practice go-to-market strategies for non-voice mobile services is now available to order. Loaded with valuable information that will help you understand how to develop class-leading mobile data services, this essential study examines mobile messaging, mobile broadband and mobile applications, and offers ‘best of breed’ case studies with clear and comprehensive summaries of the strategies used to effectively deliver those services to mobile consumers. This new study also features: revenue, user and technology forecasts; market sizing; key growth drivers; devices, smartphones, handsets and hardware; high speed network technologies and infrastructure deployments; worldwide, regional and company-level analysis; data plans and pricing, value chain analysis and business models; App stores and more. PLUS, buy this new report and you can also receive the previous report in this strategy series as a bonus, for FREE. Please click here for more details. Mobile Payments 2010-2014: Examining the exciting worldwide mobile payments market, this essential new report delivers analysis of mobile payment services including in-app payments, mobile ticketing and mobile coupons, and identifies the opportunities in the mobile payments space. This invaluable research provides growth forecasts and market sizing; details the various types of mobile payments and different platforms they use; reveals the drivers and challenges affecting mobile payment development; appraises mobile payment business models and compares value chains; and offers supporting case studies and profiles of major markets, key players and successful mobile payment services. Please click here for more details. If you have any questions or if we can be of any assistance to you, please contact us by e-mail: info@portioresearch.com Copyright 2010. Portio Research Limited 2010 www.portioresearch.com © 2010, Portio Research. All Rights Reserved 121