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David Card, Vice President Research, GigaOM

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Shape the Future App Economy of Europe Workshop / Brussels, Belgium / 14th June 2013 …

Shape the Future App Economy of Europe Workshop / Brussels, Belgium / 14th June 2013

David Card is Vice President for Research at GigaOM Research. His expertise is as an industry analyst (and manager) covering the intersection of media, technology, and consumer behavior. His specialities include customer segmentation, competitive analysis, go-to-market strategies, market forecasting. Previously, David has held lead roles in Jupiter Research, International Data Corporation and Electronic Business magazine.

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  • 1. Eurapp Study Early ResultsDavid Card, VP Research14 June, 2013Shape the Future of the European App Economy
  • 2. Agenda• European app ecosystem• App developer characteristics• Platform requirements• New platform adoption patterns• Bottlenecks for the European app economy• Measuring success
  • 3. European App EcosystemOS suppliersAPI suppliersDevicesSocialMobileSmart TVISVsNew PlatformsEnvironmentApp Developer TypesOriginatorIT DevelopersCottageIndustry, HobbyistsAftermarketApp Stores, 3rd party app-discoveryRevenue/Monetization• Consumer spending• Business spending• Advertising• In-app spending (virtualgoods)Jobs created
  • 4. App Developer Characteristics450,000-500,000 jobs created in US since 20072012 GigaOM Survey with App Developers Alliance (cottage industry)• 2/3 1-3 person firm• 60% developing paid mobile apps, 25% developing ad-supported apps• 40% part-time• 60% under 4 years experience• US– Some post-grad work or degree – 29%– Average salary $56,000• W. Europe– Some post-grad work or degree – 41%– Average salary $35,000• Asia--Pacific– Some post-grad work or degree – 42%– Average salary $42,000
  • 5. Platform Basics• Platforms: APIs and services• Must be win-win-win: originator, aftermarket, user• Network effects:– Increase with participation– Lock-in– Winner-take all markets• Key tactics:– Supply lower-cost technology– Create habitual usage– Drive customer acquisition– Enable service syndication
  • 6. Representative Social PlatformsSpotify Facebook Google+ Twitter LinkedInAudience ✓ ✓✓✓ ✓ ✓✓ ✓✓✓Core tech ✓✓ ✓ ✓Data ✓✓ ✓ ✓✓✓ ✓✓Revenue streams ✓ ✓✓ ✓Tools & support ✓ ✓✓ ✓ ✓Discovery &distribution✓✓ ✓✓Syndication ✓✓✓ ✓✓✓ ✓✓ ✓Key: checks represent relative strength of platform offering from developers’ perspective
  • 7. Source: Smiths Point Analytics/GigaOM Research, 2013Smartphone Crossover on the Horizon0501001502002502012 2013 2014 2015 2016 2017(millions)Smartphone Shipments, 2012-2017North America Western Europe Japan
  • 8. Source: GigaOM Pro U.S. consumer survey, 3/12 N = 1,1653%3%13%14%18%19%21%22%34%40%46%6%6%26%29%38%39%43%44%69%61%69%0% 20% 40% 60% 80%Cashed in a digital couponMade a paymentPosted photos to the webPosted to a social networkDownloaded an appBrowsed the webViewed a social networkPlayed a gameE-mailTook photosSMSRegular Activities on US PhonesSmartphone OwnersAll Phones% of online adults with mobile phonesQuestion asks: Which of the following activities did you domonthly or more frequently on a mobile phone? (Select allthat apply)Smartphones Changed US Mobile Usage
  • 9. Source: Internet World Stats, 2012Facebook Adoption Passing 50% in Europe050100150200250Mar-11 Jun-11 Seo 2011 Dec-11 Mar-12(millions)Facebook Subscriber GrowthEurope Asia North America
  • 10. Source: GigaOM Pro U.S. consumer survey, 3/12 N = 7124%6%7%9%12%13%14%14%17%24%46%79%0% 20% 40% 60% 80% 100%Look for datesSeek or offer job opportunitiesShopListen to musicShare news storiesLocal event informationProfessional communicationsFind out about entertainmentRead news storiesPlay gamesView or post photosCommunicate with friendsRegular Activities on US Social Networks% of online adults using social networksQuestion asks: For what purposes do you use socialnetworking sites regularly? (Select all that apply)Communications, Photos Still Dominated Social
  • 11. Source: GigaOM Research, NextMarket Insights, 2013Smart TV Platforms Just Getting Underway010203040502011 2012 2013 2014 2015(millions)Smart TV Shipments, 2011-2015Europe North America
  • 12. Bottlenecks for the Eurapp Economy• Environmental– Platform concentration: UScompanies dominate– 3+ year lag in adoption– Fragmented markets– Conservativeinvestors, entrepreneurs• Technical– Cross-platform development– Dev tools, open source– Native language support tools– Lagging 4G– Data portability• Business and Financial– Immature ad market– No standard ad measurement“currency”– Unwillingness to pay for apps– Low-priced apps– Customer acquisition costs– Access to capital• Resources– Fewer developers– Lower salaries– Lack of business expertise attech startups
  • 13. Early Feedback on Bottlenecks• Interviews with platforms, aftermarket, developers• Consensus: app developers need more support on businessdevelopment (marketing, monetization) than techKey Business and Financial Bottlenecks:• Revenue opportunities: direct fees seem more immediatelydesirable than advertising• Marketing assistance: promotion/discovery, search advertising andother marketing• Expansion into additional national markets• Expertise and/or platforms to support localcurrencies, taxes, different carrier or platform policies, etc.
  • 14. Measuring Success• Independent Software Vendors– Revenue– Downloads; monthly users– Franchise expansion– In-app purchasing patterns– Brand lift• IT Developers– Adoptionby employees, customers, partners– Market-specific objectives(e.g., reducedcustomer service costs, increased transactions, etc.)• Cottage Industry, HobbyistDevelopers– Similar to ISVs on reduced scale– Ability to attract funding– Growth as exit path to IPO oracquisition• Sustainability– Critical mass– Path to maturity– Extended product portfolio– True hobbyists: provide forown personal income, not lastingbusiness
  • 15. Takeaways and Next Steps• Platform growth will take care of itself• Are the platforms providing the necessary ingredients for theecosystem?• Who can assist with the business and financial bottlenecks? How?• Two surveys– Independent app developers– IT app developers• Feedback for the aftermarket model and jobs profiling• Input into the crowdsourcing exercisesOn to the workshopping!