gravitytank // Apps Get Real Presentation

apps get real Perspectives on the Phenomenon

35%phone users say of app “Having apps on my phone has changed BLACKBERRY STORM my life.” “My life has definitely changed since I started using apps. If I didn’t have this thing, I could not be doing what I’m doing simultaneously [writing a cocktail book, managing a restaurant, and starting a liquor company]. There’s just no way. It would be impossible.” —Adam

54% have say apps changed how they think about their APPLE phone i PHONE “When the iPhone launched, it was a $500 piece of crap. Now, with apps, it’s a mini-computer.” —Ryan

67%that the ability report to download apps and games drove them to buy their phone GOOGLE G1 “OK, now that’s really cool. [re ShopSavvy app, using bar codes to search for products in stores]. In fact, if that’s all it did, I would’ve gotten the phone.” —Dr. Larry

SECTION 1 // Introduction And then there were apps How are apps different How do they buy, use, and this time? shop for apps? Who uses apps Are apps a fad or and why? something more? 5 // apps get real // © 2009 gravitytank

SECTION 1 // Introduction These apps are not like those apps “We have almost 20 years of experience with mobile applications for the phone, but apart from the viral spread of texting in the U.S., and companies like DoCoMo in Japan, the business model for apps was flawed, the handsets were flawed, the networks were too slow, and the carriers didn’t see the real market for it.” —Trip, app developer “Comparing Palm apps to iPhone apps is like comparing Space Invaders to games on a Wii.” —Chris, iPhone user

SECTION 1 // Introduction These apps are not the mobile web “In a webpage you are subjecting yourself to your web browsers whims. If you’re trying to do more than one thing at once, it doesn’t work. Web apps don’t do things well.” —Josh

SECTION 1 // Introduction These phones are not smartphones THe THird generATion of mobile new & improved app-phone GEN 1 GEN 2 GEN 3 Phone SmartPhone aPP-Phone circa 1983 circa 2001 circa 2008 talk talk talk email email calendar calendar + grocery list + game machine + white board + bank teller + flashlight new & improved + light sabre + anatomy text app-phone + exercise coach + travel guide + web browser + alarm clock 9 // apps get real // © 2009 gravitytank + magic flute + weather check-

To understand these apps, think music “You can now think differ- ently about creating software, because the licensing and distribution problems are now off your plate... ...It’s sort of l ike ” yl. rec vin or ng er d m op co lli se el pa ev ,d ni m le x es ma fro — A ay king the transition aw

SECTION 1 // Introduction About our methodology Each section of this report integrates primary-source research collected by gravitytank as part of our effort to develop a robust and multidimensional portrait of apps, app users and app developers. These sources include: ethnograPhic DeveloPer Quantitative reSearch interviewS Survey gravitytank conducted We conducted 20 Finally, gravitytank 20 in-depth interviews interviews with app fielded two online with heavy app users coders. surveys to a total of more in San Francisco and than 1,000 smartphone Chicago during March users in April and May of and April of 2009. 2009. MYSPACE 12 // apps get real // © 2009 gravitytank

viDeo can be founD at www.gravitytank.com/aPPS

who SECTION 2 uses apps

SECTION 2 // who uses apps iPhone and G1 recenT consTAnTly RC converTs Recent converts are new smartphone users who experiment with apps. 20% CE enTerTAined The constantly entertained use their phones primarily for social and media purposes. They are 44% They think apps are fun younger, predominately male, and nice to have on a and seem to have a deep-rooted 36% phone, but they don’t see fear of boredom. apps as game-changers. life LO opTimizers Optimizers see their phones as digital extensions of their brains. They use them to manage their busy lives and to improve their ability to make the most out of the opportunities each day presents. 15 // apps get real // © 2009 gravitytank

SECTION 2 // who uses apps Bberry/WinMo recenT consTAnTly RC converTs Recent converts are new smartphone users who experiment with apps. 30% CE enTerTAined The constantly entertained use their phones primarily for social and media purposes. They are 43% They think apps are fun younger, predominately male, and nice to have on a and seem to have a deep-rooted 27% phone, but they don’t see fear of boredom. apps as game-changers. life Bberry/WinMo LO opTimizers Optimizers see their phones as digital extensions of their brains. They use them to manage their busy lives and to improve their ability to make the most out of the opportunities each day presents. 16 // apps get real // © 2009 gravitytank

SECTION 2 // who uses apps RC RECENT CONVERTS TOP 5 RE DOWNLO 1 77% It (5 WHO ARE 36 65% 55% 42% 48% 2 57% It so THEY?  AVERAGE AGE FEMALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 3 53% It es 4 47% It us NOT VERY  only 22% “like to have the latest and best technology” 5 42% It do tech focused APP OPINIO (2 PHONE OWNERSHIP APP ENGAGEMENT 63% Apps are This is my ﬁrst I use apps... overwhelmi smartphone there are jus 51% many of the 76 > recenT converTs Melissa % 52% ( Apps are lik • My motto 24% 30% candy — a fu treat with lit “If it’s easy, I’ll try it.” 19% nutritional v • My phone I’ve had ( is fun andothers in the past • Apps are makes life easier. 25% Apps help m a great plus but a bit overwhelming. 3% 3% 24% 30% 73% 66% more done a 55% /45% 38% / 62% CE LO CE LO CE LO keep organi LO CE “It’s fun to use apps. Grocery iQ totally makes shopping more fun, and keeps ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME me so organized.” CE = Constantly Entertained LO = Life Optimizers 17 // apps get real // © 2009 gravitytank $ 80 %

SECTION 2 // who uses apps RC RECENT CONVERTS RC RECENT CONVERTS TOP 5 R TOP 5 RE DOWNLO DOWNLO 1 1 77% 77% It It (5 (5 WHO WHO ARE 36 65% 55% 42% 48% 2 2 57% 57% It It so ARE % % % % so THEY? THEY?  AVERAGE AVERAGE AGE AGE FEMALE FEMALE MARRIED MARRIED HAVE KIDS HAVE KIDS at home at home COLLEGE GRAD COLLEGE GRAD or higher or higher 3 3 53% 53% It It es es  4 4 47% 47% It It us us NOT VERY  only 22% “like to have the latest and best technology” VERY NOTfocused  only 22% “like to have the latest and best technology” 5 5 42% 42% It It do do tech tech focused APP OPINIO APP OPINIO PHONE OWNERSHIP PHONE OWNERSHIP APP ENGAGEMENT APP ENGAGEMENT 63% (2 63% are (2 Apps This is my ﬁrst I use apps... I use apps... Apps are This is my ﬁrst overwhelmi overwhelmi smartphone there are ju 51% smartphone there are jus many of the % many of the 76% % 52% ( ( 52% are lik Apps 24% 24% 30% % Apps are lik candy — a f candy — a fu treat with li treat with lit 19% nutritional v nutritional v I’ve had % I’ve had others in the past others in the past 25% ( 25% help (m Apps 3% 3% 24% 24% 30% 30% 73% 73% 66% 66% Apps help m 3% 3% more done more done a 55% /45% 55% /45% 38% / 62% 38% / 62% CE CE LO LO CE CE LO LO CE CE LO LO keep organi LO CE keep organi LO CE ...OCCASIONALLY ...OCCASIONALLY ...FREQUENTLY ...FREQUENTLY ...ALL THE TIME ...ALL THE TIME CE = Constantly Entertained LO = Life Optimizers CE = Constantly Entertained LO = Life Optimizers $ 2.80 ...Have never paid for an app 40% 80 % 18 // apps get real // © 2009 gravitytank T H E TICKER ...Dollars spent on apps last month $ ...Use apps e

MARRIED HAVE KIDS at home SECTION 2 // who uses apps COLLEGE GRAD or higher 3 53% It seems like a fun and entertaining escape (45%) ENTER 4 47% It was recommended by a friend who uses it (40%) RC RECENT CONVERTS atest and best technology” 5 42% It’s new and I’m curious about what it does (32%) TOP 5 RE HEALTHCARE DOWNLO 77% 1 It (5 WHO ARE 36 65% APP OPINIONS42% 48% 55% 2 57% R It so THEY? AVERAGE AGE FEMALE 3 53% MARRIED PHO HAVE KIDS at home COLLEGE GRAD or higher It es  (23%*) (37%) TOP 5 REASONS FOR 63% MOST POPULAR APPS (penetration%% 63% 4 47 It us Apps are I’m sure there are DOWNLOADING APPS overwhelming — better apps, but I 5 42% It NOT VERY  only 22% “like to have the latest and best technology” do 77% (57%*) there are just too don’t know what 1 51% It was free tech focused many of them 78 *) they are GAMES (80 N 2 57% It makes my life easier in some way (53%) (28 ) 52% SOCIAL NETWORKING % % 10 62 ) (40 % (58) APP OPINIO PROD (2 63% 62 Apps are like I can’t imagine 30seems(45%)a fun and entertaining PHONE OWNERSHIP APP ENGAGEMENT 53% escape candy — a fun WEATHER phone using a 3 Apps are It % like This is my ﬁrst I use apps... (68) overwhelmi treat with little without apps 57 smartphone there are jus 51nutritionalENTERTAINMENT % value (58) many of the 4 47%76wasitrecommended by a friend who It uses (40%) % 25% (50 ) % 30 48 ) (54 MUSIC % % (63) 52% ( Apps are lik 30 42% does (32%) 37 candy — a fu 24% Apps help me get Apps have 24% 5 30% It’s new and I’m curious about what it 73% 66% more done and % UTILITIES how I changed treat with lit E (38) 19 nutritional v CE LO CE LO % keep organized think about my 35 I’ve had ( ...FREQUENTLY others in the past ...ALL THE TIME phone HEALTHCARE & FITNESS (28) 25% Apps help m 33 3% 3% 24% 30% 73% 66% more done a 55% /45% 38% / 62% CE LO CE LO NEWS LO CE keep organi Entertained LO = Life Optimizers LO CE (47) * versus total a 30 ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME REFERENCE APP OPINIONS CE = Constantly Entertained LO = Life Optimizers (32) 72% 27 PHOTOGRAPHY ...Have never paid for an app 40 (23%*) (37%) 80 63% % 19 // apps get real // © 2009 gravitytank 63% $ ...Use apps every day 80 (36) ...Number of apps curre %

SECTION 2 // who uses apps RC RECENT CONVERTS TOP 5 RE DOWNLO ONS FOR NG APPS MOST POPULAR APPS (penetration %) 1 77% It (5 WHO ee 78 (80 ARE *) GAMES 36 65% 55% 42% 48% 2 57% It so my life easier in y (53%) SOCIAL NETWORKING 62 (58) THEY? AVERAGE AGE FEMALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 3 53% It es WEATHER 62 47% like a fun and entertaining (68) 4 It 45%) 57 ENTERTAINMENT (58) us NOT VERY 48 only 22% “like to have the latest$2.80 on apps last 42% commended by a friend who 5 It 0%) MUSIC Dollars spent $4.50 (LO) (63) and best technology” do $7.10 (CE) nd I’m curious about what it %) tech focused 37 UTILITIES (38) month HEALTHCARE & FITNESS 35 (28) 33NEWS (47) 40% Havefor an paid never 26% (LO) 21% (CE) APP OPINIO 30 REFERENCE (32) app (2 ) (37%) PHONE OWNERSHIP 27 PHOTOGRAPHY APP ENGAGEMENT 63% 63% (36) I use apps... Apps are I’m sure there are This is my ﬁrst smartphone 27 SPORTS (35) 72% Use apps 80% (LO) overwhelmi there are jus 51% every day 83% (CE) better apps, but I don’t know what 25 LIFESTYLE (27) many of the 76% 25 they are NAVIGATION ( 52% (41) ) 10% (40%) 23 PRODUCTIVITY (33) 20 Number of 28% (LO) Apps are lik on 30% I can’t imagine using a phone 24%23TRAVEL (29) apps currently phone 21% (CE) candy — a fu treat with lit without apps 20 MEDICAL 19% (28) nutritional v 20 I’ve had 8 New apps FINANCE ( ) 30% (54%) others in the past (32) 11% (LO) 25% t Apps have 17 BOOKS (22) 3% 3% 24% 30% added last month 73% 66% 14% (CE) Apps help m 55% /45% 38% / 15 EDUCATION more done a changed how I 62% CE (22) LO CE LO CE LO keep organi think about my phone LO CE 2 OTHER ...OCCASIONALLY (2) ...FREQUENTLY ...ALL THE TIME * versus total all app-phone users (iPhone and G1) CE = Constantly Entertained LO = Life Optimizers 20 // apps get real // © 2009 gravitytank % $ 80 %

SECTION 2 // who uses apps CE CONSTANTLY ENTERTAINED TOP 5 R WHO 28 68% 42% 67% 40% DOWNLO ARE THEY? AVERAGE AGE MALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 1 54%  2 47% 3 39% TECH  59% “like to have the latest and best technology” JUNKIES > consTAnTly enTerTAined 4 36% Josh 5 35% • My motto PHONE OWNERSHIP APP ENGAGEMENT • My phone 73 Boredom is to be avoided at all cost.” % I use apps... gives me instant access to APP OPINI This is my ﬁrst entertainment. smartphone ( • Apps are the latest way to feed my addiction. 55% I like talkin 38% about apps “I can’t remember what I did before the with friend iPhone. Nothing. I did nothing.” 62% 24% 40% I’ve had Apps help more done others in the past keep organ 76% /24% 55% / 45% 19% RC 3% 3% LO 51% RC 30% LO 30% RC 66% LO RC LO ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME RC = Recent Converts LO = Life Optimizers 21 // apps get real // © 2009 gravitytank $ 10 %

SECTION 2 // who uses apps CE CONSTANTLY ENTERTAINED CE CONSTANTLY ENTERTAINED TOP 5 R TOP 5 R WHO WHO 28 68% 42% 67% 40% DOWNLO DOWNLO ARE ARE THEY? THEY? AVERAGE AVERAGE AGE % MALE MALE % MARRIED MARRIED % HAVE KIDS HAVE KIDS at home % COLLEGE GRAD COLLEGE GRAD or higher 11 54% Ie %   AGE at home or higher 2 2 47% I( % 3 3 39% Iw % TECH TECH  59% “like to have the latest and best technology”  59% “like to have the latest and best technology” JUNKIES JUNKIES 4 4 36% I( % 5 5 35% Is % PHONE OWNERSHIP PHONE OWNERSHIP APP ENGAGEMENT APP ENGAGEMENT 73% % This is my ﬁrst II use apps... use apps... APP OPINIO APP OPINI This is my ﬁrst smartphone smartphone 55% (( 55% I like talkin I like talkin 38% 38% about apps about apps with friend with friend 62% % 24% % 40% ( 40% I’ve had Apps help m Apps help I’ve had more done others in the past more done others in the past keep organ keep organ 76% /24% 55% / 45% 76% /24% 55% / 45% 19% 19% RC RC 3% % 3% 3% LO LO 51% 51% RC RC 30% 30% LO LO 30% 30% RC RC 66% 66% LO LO RC RC LO LO ...OCCASIONALLY ...OCCASIONALLY ...FREQUENTLY ...FREQUENTLY ...ALL THE TIME ...ALL THE TIME RC = Recent Converts RC = Recent Converts LO = Life Optimizers LO = Life Optimizers 22 // apps get real // © 2009 gravitytank $ $ 10 10 % %

47% (57%) SOCIAL NE SECTION 2 // who uses apps 3 39% It was recommended by a friend who uses it (40%) N nd best technology” CE CONSTANTLY ENTERTAINED 4 36% It makes my phone look cool (17%) PHO 5 35% It makes my life easier in some way (53%) TOP 5 R 73 WHO ARE % THEY? 28 AVERAGE 68% MALE 42% POPULAR40% (penetration %) MOST 67% MARRIED APPS HAVE KIDS 54 COLLEGE GRAD 1 DOWNLO % AGE at home or higher  APP OPINIONS 2 47% 55 27 80 ) (41%*) (37 GAMES 39% % 3 (80*) TOP 5 REASONS FOR to have the latest and best technology” TECH  59% “like % % DOWNLOADING APPS JUNKIES I like talking about apps 64 MUSIC there are I’m sure (63) better apps, but I 4 5 36% 35% 1 54% 60 It seems like a fun and entertaining with friends don’t know what WEATHER they are escape (45%*) (68) 73 58 ) 24% 2 47% It was free PHONE OWNERSHIP (57%) APP ENGAGEMENT 40 % (50 ) 14 % % ENTERTAINMENT (23 % % (58) 55 This is my ﬁrst I use apps... APP OPINI Apps SOCIAL NETWORKING help me get Apps are PRO smartphone 39% who uses it (40%) overwhelming (58) ( 3 It was recommended by a friend more done and — 55 % 45 keep organized there are just too HEALT I like talkin 38% NAVIGATION about apps 51% 30% 30% 66% many of them (41) 36% It makes my phone look cool with friend 4 RC LO 62 (17%) RC % LO 24 41 PHOTOGRAPHY 40 (36) 41 .FREQUENTLY ...ALL THE TIME % % 5 35% It makes my life easier in some way (53%) I’ve had others in the past NEWS (47) Apps help more done 36 keep organ Converts LO = Life Optimizers * versus total 76% /24% 55% / 45% 19% RC 3% 3% LO 51% RC 30% LO SPORTS 66% 30% RC LO (35) RC LO ...OCCASIONALLY ...FREQUENTLY 29 UTILITIES ...ALL THE TIME (38) 21 ...Use apps every day 80 29 0 % RC = Recent Converts % LO = Life Optimizers FINANCE ...Have never paid for an app ...Number of apps curr (32) APP OPINIONS 26% (LO) 27 O) 40% (RC), 72% (RC), 83% (LO) 23 // apps get real // © 2009 gravitytank EDUCATION $ 10 % (22)

SECTION 2 // who uses apps CE CONSTANTLY ENTERTAINED MOST POPULAR APPS (penetration %) TOP 5 R WHO 28 68% 42% 67% 40% DOWNLO GAMES 80 (80*) ARE ONS FOR NG APPS MUSIC 64 (63) THEY? AVERAGE AGE MALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 1 54% like a fun and entertaining 45%*) WEATHER 60 (68) 2 47% ENTERTAINMENT 58 39% ee (58) 3 TECH 55 59% “like to have the latest and $7.10 on apps last SOCIAL NETWORKING Dollars spent $2.80 (RC) (58) commended by a friend best technology” $4.50(LO) it (40%) 45 NAVIGATION JUNKIES (41) month 4 36% my phone look cool 41 PHOTOGRAPHY (36) 5 35% my life easier in y (53%) 41NEWS (47) 21% Havefor an 40% (LO) paid never 26% (RC) 36 SPORTS (35) app 73% PHONE OWNERSHIP 29 UTILITIESAPP ENGAGEMENT (38) This is my ﬁrst 29 APP OPINI 80% Use apps FINANCE I use apps... (32) 72% (RC) smartphone ) (37%) 27 EDUCATION (22) every day 83% (LO) 55% ( 27% 27 TRAVEL (29) I like talkin I’m sure there are 38% about apps better apps, but I 26 21 Number of 20% (LO) REFERENCE with friend (32) (RC) don’t know what 62% 23 they are BOOKS (22) apps currently 28% on phone ) 14% (23%) 22 LIFESTYLE (27) 24% 40% t Apps are 22 PRODUCTIVITY I’ve had Apps help 14 New apps (33) overwhelming — 8% (RC) more done there are just too 20 others in the past HEALTH & FITNESS (28) added last 11% (LO) keep organ 19% 3% 3% 30% month 12 many of them MEDICAL 51% 30% 66% (18) 76% /24% 55% / 45% RC LO RC LO RC LO RC LO 1 OTHER (2) ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME * versus total all app-phone users (iPhone and G1) RC = Recent Converts LO = Life Optimizers 80%...Number of apps currently on phone 21 ...New apps added last month 10 $ 14 24 // apps get real // © 2009 gravitytank day %

SECTION 2 // who uses apps LO LIFE OPTIMIZERS TOP 5 R DOWNLO > life opTimizers Kate 1 74% I( WHO • My motto ARE 35 50% 60% 41% 53% 2 72% I( • My phone THEY? “Use every second.”  AVERAGE AGE MALE / FEMALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 3 60% I( is my external brain. I can’t live without it. 4 39% I( • Apps FAIRLY HIGH  46% “like to have the latest and best technology” help me get the most out of every 5 37% Iu second. tech engagement “I feel like my iPhone is my significant other. There’s a lot that I have to keep up with, and if I can offload some of APP OPINI that, and access it when I want to, that’s what works.” (5 75% 66% PHONE OWNERSHIP APP ENGAGEMENT Apps help me g This is my ﬁrst I use apps... more done and smartphone organized 55% 53% ( Having apps on 45% 30% phone has chan my life I’ve had I’ve had ( others in the past others in the past 12% 76% /24% 38% /62% 19% RC 3% CE 3% 51% RC 24% CE 30% RC 73% CE Apps are like ca a fun treat with nutritional valu RC CE ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME RC = Recent Converts CE = Constantly Entertained 25 // apps get real // © 2009 gravitytank $ 50 %

SECTION 2 // who uses apps LO LIFE OPTIMIZERS LO LIFE OPTIMIZERS TOP 5 R TOP 5 R DOWNLO DOWNLO 1 1 74% II(( 74% WHO WHO 35 50% 60% 41% 53% 2 72% II(( 72% 35 50% 60% 41% 53% 2 ARE ARE THEY? THEY?  AVERAGE AVERAGE AGE AGE MALE / MALE / FEMALE FEMALE MARRIED MARRIED HAVE KIDS HAVE KIDS at home at home COLLEGE GRAD COLLEGE GRAD or higher or higher 3 3 60% II(( 60%  4 4 39% II(( 39% FAIRLY HIGH  46% “like to have the latest and best technology” 5 5 37% IIuu 37% FAIRLY HIGH  46% “like to have the latest and best technology” tech engagement tech engagement APP OPINI APP OPINI 75% (5 75% me(5 66% PHONE OWNERSHIP APP ENGAGEMENT 66% PHONE OWNERSHIP APP ENGAGEMENT Apps help g This is my ﬁrst I use apps... Apps help me g I use apps... more done and This is my ﬁrst smartphone more done and organized smartphone organized 55% 55% 53% ( 53%apps on( Having 45% 45% 30% 30% Havinghas chan phone apps on phone has chan my life my life I’ve had I’ve had othersI’ve had I’ve had others in the past in the past others in the past others in the past 12% ( ( 12% like ca 76% /24% 38% /62% 19% 19% RC 3% 3% CE 3% 3% 51% 51% RC 24% 24% CE 30% 30% RC 73% 73% CE Apps are Apps are like ca a fun treat with a fun treat valu nutritional with 76% /24% RC 38% /62% CE RC CE RC CE RC CE nutritional valu RC CE ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME RC = Recent Converts CE = Constantly Entertained RC = Recent Converts CE = Constantly Entertained $ 4.50 ...Have never paid for an app 26% 26 // apps get real // © 2009 gravitytank ...Dollars spent on apps last month $ 50 % ...Use app

MARRIED HAVE KIDS at home COLLEGE GRAD or higher 60% (57%) 39% It is easier to access than websites SECTION 2 // who uses apps 4 (27%) SOCIAL NE LO LIFE OPTIMIZERS and best technology” 5 37% It wasitrecommended by a friend who uses (40%) ENTER TOP 5 R PRO DOWNLO 74% I( 1 WHO ARE 35 50% APP60% 41% 53% OPINIONS 2 72%NI( THEY? AVERAGE AGE MALE / FEMALE 3 60% I( MARRIED HAVE KIDS at home COLLEGE GRAD or higher  75% MOST %*) 45% APPS (penetration %) (50 (26%) 39% R 66% 4 TOP 5 REASONS FOR POPULAR I ( Apps help me get Apps are essential to DOWNLOADING APPS 5 37% Iu FAIRLY HIGH  46% “like to have the latest and best technology” being more productive more done and keep 74% (53%*) organized in my work 1 tech engagement life easier in some way It makes my 82WEATHER (68*) PHO 2 72% It will make me more productive (44%) 53 (35%) 71 81 % (54%) GAMES % (80) APP OPINI HEALTHCARE (5 75 69 Having apps on my Apps have changed 30%60% It was free 66 PHONE OWNERSHIP APP ENGAGEMENT % phone has changed MUSIC about how I think % (63) 3 Apps help me g This is my ﬁrst I use apps... more done and (57%) my life my phone 61 smartphone organized NEWS (47) 4 39% 55 easier to access than websites It is (27%) % 12 (50%)% 60 SOCIAL NETWORKING 53 (58) % Having apps on ( 30 37% uses it (40%) 59 Apps are like candy — phone has chan 51% 24% 5 45% It was recommended by a friend who 30% 73% % ENTERTAINMENT a fun treat with little my life E RC CE RC CE (58) nutritional value 51 I’ve had I’ve had ( ..FREQUENTLY others in the past others in the past ...ALL THE TIME PRODUCTIVITY 12 (33) % 3% Apps are like ca 49 19% 3% 51% 24% 30% 73% a fun treat with 76% /24% 38% /62% RC CE RC CE UTILITIES RC CE verts CE = Constantly Entertained RC CE (38) nutritional valu * versus total a 43 ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME NAVIGATION APP OPINIONS RC = Recent Converts CE = Constantly Entertained (41) 50 75 ...Have never % paid for an app (50%*) 27 // apps get real // © 2009 gravitytank 26 % 45 % (26%) 41 % FINANCE ...Use apps every day 83 ...Number of apps cu (32) $ 50 %

SECTION 2 // who uses apps LO LIFE OPTIMIZERS TOP 5 R DOWNLO S FOR APPS MOST POPULAR APPS (penetration %) 1 74% I( WHO fe easier in some way WEATHER 82 ARE 35 (68*) 50% 60% 41% 53% 2 72% I( e more productive 81 THEY? GAMES (80) AVERAGE AGE MALE / FEMALE MARRIED HAVE KIDS at home COLLEGE GRAD or higher 3 60% I( 69  MUSIC 4 39% I( (63) 61 NEWS (47) FAIRLY HIGH  46% “like to have the latest and 4.50 on apps last $7.10 (CE) $best technology” spent $2.80 (RC) 37% Iu access than websites 5 SOCIAL NETWORKING 60 (58) Dollars mended by a friend who tech engagement ENTERTAINMENT 59 (58) month PRODUCTIVITY 51 (33) 49 UTILITIES (38) 26% Havefor an 40%(CE) paid never 21% (RC) APP OPINI NAVIGATION 43 (41) app (5 75% 41 66% PHONE OWNERSHIP FINANCE APP ENGAGEMENT (26%) 45% (32) I use apps... Apps help me g Apps are essential to being more productive in my work This is my ﬁrst REFERENCE smartphone 40 39 SPORTS (32) (35) 83% every day Use apps 72% (RC) 80% (CE) more done and organized 55% 34 PHOTOGRAPHY (36) 53% ( 71% (54%) HEALTHCARE & FITNESS 34 (28) 28 % Number of 20%(CE) (RC) Having apps on Apps have changed how I think about LIFESTYLE 45% 33 (27) 30 on phone apps currently 21% phone has chan my life my phone 33 TRAVEL (29) 24 had I’ve had I’ve 11 New apps 8% (RC) BOOKS ( others in the past others in the past 23 (22) added last 14% (CE) 12% 3% MEDICAL (18) Apps are like ca 19% 3% 51% 24% month30% 73% EDUCATION 76% /24% 38% /62% 18 RC (22) CE RC CE RC CE a fun treat with nutritional valu RC CE OTHER 4 (2) ...OCCASIONALLY ...FREQUENTLY ...ALL THE TIME * versus total all app-phone users (iPhone and G1) RC = Recent Converts CE = Constantly Entertained 28 // apps get real // © 2009 gravitytank % $ 50 %

life SECTION 3 with apps

SECTION 3 // life with apps ...is different 35% Of aPP PhOne useRs say “Apps have changed my life. I didn’t realize I could do so much on the phone: work, school, re- “It’s a life management tool.” “Having apps on my phone —Heather membering stuff, has changed my life.” getting stuff done.” —Ryan “I’m constantly using it. I use it to text teachers and “It makes you more productive, more effective, get ahold of people in the building. And using apps forget less.” that my boss wouldn’t be happy if he knew.” —Greg —Eric “I think it changed the way that I could be “Here is my iPhone. If you get one, it will change successful at what I was doing.” your life.” —Ashwin —Melissa 30 // apps get real // © 2009 gravitytank

SECTION 3 // life with apps Life with apps In short bursts App-phone users report that about 40% of their phone use is on apps Phone ≠˙ 29 interactions / day, 117minutes spent / day aPPS ≠˙ 12 interactions / day, 55 minutes spent / day 31 // apps get real // © 2009 gravitytank

SECTION 3 // life with apps A small set of core apps hOw many aPPs dO yOu use every Day? 1-2 6+ 1-2 6+ On aveRage 26% 29% 21TOTal aPPs 26% Of These, 29% >7 aRe used EvErY DAY 24% 21% 24% 21% 3-4 5-6 3-4 5-6 iPhone and G1 users 32 // apps get real // © 2009 gravitytank

SECTION 3 // life with apps A handful of app categories get the lion’s share of usage Penetration (% saying “I downloaded an app from this category on my phone”) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 20% 30% 40% 50% Frequency of use (% saying “I use them every day”) 33 // apps get real // © 2009 gravitytank

SECTION 3 // life with apps Life with apps % less time app users spend on other activities/devices as a result of apps -25 -20 -15 -10 -5 0 -24% MP3 PLAYER -24% READING A NEWSPAPER -23% WATCHING T.V. -22% PORTABLE GAMING DEVICES -22% USING A COMPUTER -20% GAME CONSOLE -20% READING A BOOK -20% TALKING ON THE PHONE -19% USING GPS DEVICE -14% DIGITAL CAMCORDER -12% INTERNET TABLET -12% DIGITAL VIDEO RECORDER/DVR/TIVO 34 // apps get real // © 2009 gravitytank

SECTION 3 // life with apps Why? benefit 1 ENTErTAINED 63% Of aPP-PhOne useRs say “Apps keep me entertained “I never have to be bored.” when I’m idle.” benefit 2 PrODUCTIvE 50% “I can get more things Of aPP-PhOne useRs say “Apps help me get more done anytime, anywhere.” done and keep organized.” benefit 3 CONNECTED 34% “I can constantly be in touch Of aPP-PhOne useRs say “Apps help me stay connected to with people and info.” the people and info I care about.” 37 // apps get real // © 2009 gravitytank

SOlITAIrE Tasia and megan keep busy “Apps make it so much more entertaining. Just when you are bored...I was at the hospital for 2.5 hours. I was playing Solitaire and Word Search. It was just really easy. In study hall if I’m done and there’s nothing to do, it’s just really easy.” “We had a Spanish field trip and we were watching a movie, and we played Solitaire, Word Search, and Tetris. It was cool.”

SECTION 3 // life with apps BENEFIT 1 BENEFIT 2 Entertained Produ These apps are not programs of the PC variety SEGMENTS SEGMENTS Party tricks Quick getaways Pacifiers Broadcast 2.0 Creators Life organize A hybrid between a Wanna get away? Apps designed to These apps let us Unleashing the Life organization game and a tech These apps provide a entertain the little access and broad- creative force in all of help people stay demo, these apps quicker and cheaper ones. Great to have cast content from us, these apps enable top of things from are designed to escape than on your phone, until remote sources, users to compose mundane — tedio impress others by Southwest. Books, the little punk whether they be our music, manipulate lists, passwords a highlighting the music, and games refuses to give it hard drives or new photos, and create dos — to the asp amazing things your are essential quick back. broadcasting flipbook animations. tional — exercise app phone can do. escapes during a mediums. Their simplicity gets schedules, streak typical day. people started down weight loss. the creative path more easily. EXAMPLE APP EXAMPLE APP Ocarina FML Knock on Wood Simplify Media Brushes Streaks “If I want to show “These are short stories “It's like a $600 teething “You can connect to “It's a tool that allows “It’s a silly app. It’s a people something cool about people having bad toy. We give it to our your iTunes library on you to draw, and you calendar, and you pu about my phone, experiences. They make baby when she's eating the computer and have can draw straight into a an x if you achieved I show them Smule you go “oh man that to distract her while we access to all your music. canvas or you can draw whatever you wante [Ocarina], my flute app.” sucks.” try to shovel food in her Even though this phone on top of photo.” achieve. I have one —Jared, iPhone user —Josh, iPhone user mouth. She plays with is only 8 gigs and I have —Kate called Sugarless. You the Knock on Wood one. about 100 gigs of music can check how many It's mindless, but she on my computer I can days you haven’t had likes the noise, and she listen to whatever I sugar.” can do it. want from there at —Kate 39 // apps get real // © 2009 gravitytank —Greg work.” —Jeff

Jared in the grocery store “If there is something missing, I reference my phone app and open Grocery iQ. I have the Safeway list and [store] what should be on the juice list. I can go in and check every juice I have and then, for notes, I put the UPC code. It saves me time.” GrOCErY iQ

dr larry in the lab “If you’re a problem solver, you want as many tools as you can get in your tool kit as you can have. Not every problem can be solved with simple tools. This provides tools that I wouldn’t normally have. The likelihood that 5-10% of apps will end up delivering is probably not that great. But even a couple percent will give me things that I couldn’t do if I didn’t have it with me.” PICASA

SECTION 3 // life with apps BENEFIT 2 BENEFIT 3 Productive Connected These apps are not programs of the PC variety SEGMENTS SEGMENTS Creators Life organizers Work facilitators Active ware Can openers Instant genius Social Unleashing the Life organization apps These apps allow From grocery shopping Can openers are Reference materials Social a - creative force in all of help people stay on people to coordi- to exercising and those incredibly give you access to a connect us, these apps enable top of things from the nate, plan and traveling, these apps useful apps that do focused data set and commun users to compose mundane — tedious conduct supporting make any activity more one thing really well; make you instantly our frien our music, manipulate lists, passwords and to tasks for work productive and you may need them knowledgeable on co-work w photos, and create dos — to the aspira- whether alone or enjoyable. They only once in a while, any subject direct d flipbook animations. tional — exercise with collaborators. become essential gear but you're sure glad anywhere at any the orig Their simplicity gets schedules, streaks and Includes classic for previously that you have them. time. Also known as of a pho people started down weight loss. organizational tools non-mobile experi- From levels to the end of all bring ad the creative path and new ones. ences. Anyone for currency converters, ongoing bar and function more easily. app-style bird- these apps turn dinner-table capabili watching ? phones into Swiss debates. mobile d Army knives. EXAMPLE APP EXAMPLE APP Brushes Streaks Evernote iMapMyRun Flashlight Stars “It's a tool that allows “It’s a silly app. It’s a “Evernote is just a good “I wasn’t tracking runs “I even use the “I’ve got the stars “Facebook n you to draw, and you calendar, and you put in way to get your ideas before. Now I know how flashlight application if program which would with me w e can draw straight into a an x if you achieved out, and spill them into far I run and how long it I have to go into the be great at night. It tells I check it ic. canvas or you can draw whatever you wanted to your InBox. It’s not takes me. It’s helping me baby's room in the you which star clusters day. Its al ne on top of photo.” achieve. I have one perfect but it has a lot of run more.” middle of the night to are there in the sky it's alway ve —Kate called Sugarless. You potential.” —Kim give her Tylenol... It's based on your location.” that's kin ic can check how many —Ryan perfect: I always know —Chris, app-phone user —Kim, iPh days you haven’t had where my phone is; I sugar.” don't always know —Kate where a random 42 // apps get real // © 2009 gravitytank flashlight is in the house.”

SECTION 3 // life with apps 50% of aPP-Phone uSerS agree “help me get more done and stay organized.” 26% of aPP-Phone uSerS feel “apps are essential to their work productivity.” 43 // apps get real // © 2009 gravitytank

YAHOO ryan in the cab “I use cab time to be my time. I have Facebook on my BlackBerry, I usually update my status so mainly my parents know where I am. I check stocks. I usually use the Yahoo application. It has all my Yahoo page information. In my line of work, it’s not good to use client resources to surf the Web and do personal stuff. This is pretty nice. I downloaded it a month ago, and it allows me to do everything I need to on the PC. I use my Yahoo People as much as other people do... I check stocks, industry news, it’s all in there.”

Kim, facebook addict “I’m on Facebook way too much now that I have my phone. I never used to use it before. It’s quicker and easier, and it kind of goes with me wherever I go. I check it five to six times a day. It’s always easy and FACEBOOK always updating, which makes it kind of fun. It’s maybe made me a less social person, because I know what they’re doing without talking to them.”

BENEFIT 3 Connected SEGMENTS ctive ware Can openers Instant genius Social IV Pulse checkers om grocery shopping Can openers are Reference materials Social apps keep us News, finance, sport exercising and those incredibly give you access to a connected and scores, weather, veling, these apps useful apps that do focused data set and communicating with blogs and more — ke any activity more one thing really well; make you instantly our friends and these apps provide oductive and you may need them knowledgeable on co-workers. They are users with an instant oyable. They only once in a while, any subject direct decedents of connection to what’s come essential gear but you're sure glad anywhere at any the original purpose happening and what previously that you have them. time. Also known as of a phone, but they matters. n-mobile experi- From levels to the end of all bring added ces. Anyone for currency converters, ongoing bar and functionality and p-style bird- these apps turn dinner-table capability to a tching ? phones into Swiss debates. mobile device. Army knives. EXAMPLE APP iMapMyRun Flashlight Stars Facebook Stocks wasn’t tracking runs “I even use the “I’ve got the stars “Facebook kind of goes “I can enter my stock ore. Now I know how flashlight application if program which would with me wherever I go. portfolio in there and I run and how long it I have to go into the be great at night. It tells I check it 5-6 times a see everything going on. es me. It’s helping me baby's room in the you which star clusters day. Its always easy so I touch a symbol and see more.” middle of the night to are there in the sky it's always updating so all of the news im give her Tylenol... It's based on your location.” that's kind of fun.” associated with it. I find perfect: I always know —Chris, app-phone user —Kim, iPhone user that to be a better where my phone is; I interface than websites don't always know like fidelity.com.”

apps SECTION 4 life cycle

SECTION 4 // apps lifecycle The power of the sTreAmlined software retail model cHecKouT unbeATAble locATion greAT selecTion AlWAys fresH AlWAys loW prices rigorous quAliTy sTAndArds 49 // apps get real // © 2009 gravitytank

SECTION 4 // apps lifecycle Finding apps TOP 10 REASONS TO DOWNLOAD AN APP 1 57% It was free HOW DO PEOPLE FIND OUT 2 53% It makes my life easier in some way ABOUT NEW APPS? 3 45% It seems like a fun and entertaining escape 53% Browsing the top 25 lists or featured lists on iTunes App Store 4 44% It will make me more productive 50% Recommendations from friends 5 40% It was recommended by a friend who uses it 39% Reviews in the iTunes App Store 6 32% It’s new and I’m curious about what it does 27% Recommendations from technology websites and blogs 7 31% It seems easy to use 22% Browsing apps by popularity on Android Market 8 27% It’s easier to access than websites 22% Television 9 27% It uses the capabilities of the phone well 15% Magazines 10 22% It’s an application I already use on my computer 13% Reviews in the Android Market 13% Other reviews 50 // apps get real // © 2009 gravitytank

SECTION 4 // apps lifecycle Finding apps HOW ARE APPS DOWNLOADED? ...are downloaded to a computer, then ........... 27% 73% ........... PEOPLE FIND OUT ...of apps are down- synced loaded directly to EW APPS? the phone owsing the top 25 lists or atured lists on iTunes App Store ½ commendations from friends views in the iTunes App Store HOW OFTEN DO YOU LOOK FOR NEW APPS? of all app-phone owners commendations from technol- y websites and blogs look for new apps at least a couple of times per week owsing apps by popularity on 25 droid Market evision 20 gazines 15 views in the Android Market 10 her reviews 5 11% 13% 24% 21% 21% 8% 0 More than Once Couple of Once Couple of Once a once a day times a week times month a day a week a month or less 51 // apps get real // © 2009 gravitytank

29 Excellent value 22% SECTION 4 // apps lifecycle 34% Very good 12% 10% 7% 22% Reasonable $.99 $1.00 – $3.00 – $6.00 – $10.00 – +$20 11% Not very good Paying for $2.99 $5.99 $9.99 $19.99 4% Terrible apps hOw much have yOu sPenT On new aPPs In the laSt month? $13+ Nothing Of These, 14% 21 TOTal aPPs 5 aRe $7–$12 17% 37% PAID fOR 31% $1–$6 In the past month, how much have you spent to acquire new apps? 52 // apps get real // © 2009 gravitytank

SECTION 4 // apps lifecycle Paying for apps How satisﬁed are are How satisﬁed What is thethe most you What is most you you with your most you with your most have ever paid for for app? have ever paid an an app? expensive app? expensive app? 7% 7% $.99$.99 EXCELLENT VALUE EXCELLENT VALUE 29% 29% 25% % 25 73% of all app-phone users have paid for at least one app $1.00 – $2.99 $1.00 – $2.99 25% % 25 of those, $3.00 – $5.99 $3.00 – $5.99 34% 34% 22%22% 69% have bought an app VERY GOOD VERY GOOD that cost more than $2.99 $6.00 – $9.99 $6.00 – $9.99 of app-phone users con- 63% sider their most expensive app an excellent or very good value REASONABLE REASONABLE 22% 22% 12% % 12 $10.00 – $19.99 $10.00 – $19.99 NOT VERY GOOD 11% NOT VERY GOOD 11% 10%10% TERRIBLE 4% TERRIBLE 4% $20.00 + + $20.00 53 // apps get real // © 2009 gravitytank

SECTION 4 // apps lifecycle Trial, churn and deleting people deleTe Apps for A vArieTy of reAsons: 59% It didn’t really do what I was 30% It was hard to use and complicated hoping it would 18% I forgot I had it 48% I found a better alternative 12% I couldn’t just pick it up and use it 45% It just got old and boring 11% I didn’t like the way the design/ 44% It was really slow to run graphics looked 35% It caused technical problems on my phone 54 // apps get real // © 2009 gravitytank

apps SECTION 6 future

SECTION 5 // apps future % of people who are extremely or very interested in apps for: % of people who are % 76 % 71 These apps are not programs of extremely or RESTAURANTS BANKS the PC variety (coupons, menus, ordering, reservations, etc.) (account details, etc.) very interested in apps for: % 69 % 67 BIG CHAIN STORES GROCERY STORES (prices, product info and availability, (lists, prices, sales, etc.) sales and promotions, etc.) 62 % 52 % WEB-BASED RETAILERS AIRLINES (prices, product info and availability, (prices, ﬂight times, special sales and promotions, online fares, etc.) shopping, etc.) 52 % 51 % HOTELS CREDIT CARD COMPANIES (reservations, availability and (current balance, transaction prices, loyalty points, etc.) history, etc.) 48 % 47 % DOCTORS OFFICES PHARMACIES (appointments, billing, etc.) (prescription renewals, etc.) 61 // apps get real // © 2009 gravitytank

SECTION 5 // apps future These apps are not programs of the PC variety Netter’s Anatomy Flash Cards Category: Medical Rated 4+ Seller: Modality Inc. © Modality Inc. Version 1.2 $39.99 “If you had a patient who’s enrolled in a study and were able to type in their 46% of people believe compliance with their medications that in the future, and the side effects they had as they “will be opposed to waiting for their monthly able to get help from a doctor in visit, if they — in real time, without diagnosing and any skin off their back — could send treating a health you a note and it would go into a issue remotely.” database, you can start to think about getting reliable information faster.” —Ashwin, chief resident, app user 62 // apps get real // © 2009 gravitytank

dr. T, apps and the future of education “We need to teach them the way they learn. The students learn from these devices. I would rather spend $300 and give all them an iPhone. I could never afford to upgrade 700 PC’s [with educational software]. If we could use the phones, I wouldn’t have to spend the money on maintaining, upgrading them and bringing in technicians.” I don’t want to waste our money on books. They’re worthless. [Apps and smartphones] are engaging, immediate, automatic... kids respond to technology. You want to seduce them into learning... use the technology that they use.”

SECTION 5 // apps future “We’re clearly These apps are not programs of the PC variety looking at a 1.0 version of the App Store... What’s happening now will transform the software business, but we’re just beginning.” —Alex, iPhone app developer and trainer Only 7% of people see apps as a fad. 65 // apps get real // © 2009 gravitytank

gravitytank is a Chicago-based innovation consultancy that helps companies grow in meaningfully different ways. We do this by integrating intimate knowledge of the consumer with sharp strategy and informed design. Collaborating with a range of Fortune 500 clients, we identify new market opportunities, develop clear strategies for entry or growth, and support implementation efforts as required. An executive summary of the publication can be downloaded from the gravitytank website at http://www.gravitytank.com/apps/ © gravitytank, 2009 gravitytank 114 West Illinois Street Floor 3 Chicago, Il 60654 T 312. 988. 3000 F 312. 988. 9165 www.gravitytank.com

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gravitytank // Apps Get Real Presentation

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