Platform based mobile app stores


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  • 1 billion – Apr 24, 2009 in 9 months10 billion - Jan 22 2011
  • (Ramon T. Llamas, 2010) indicated by 2014 total smartphone shipments worldwide will reach 479.6 million units, resulting a CAGR of 22.6%.
  • 6 Mar 2008Apple first opened the App Store in July 2008, along with the launch of the iPhone 3G and the release of iPhone OS 2.0. Shortly 300 million apps were sold by December 2008. After the holidays, that number had jumped to 500 million. In early January 2010, Apple announced that sales had topped 3 billion In Jan 2011, Apple announced 10 billion downloads .
  • Apple unveiled its new App Store subscription service on Feb 15 2011, allowing publishers of content-based applications for iOS devices to offer recurring billing, letting publishers sell multiple issues through a single purchase in the company’s online App Storeon Feb 16, 2011, Google on Wednesday announced a new Web subscription service for publishers called "One Pass", which allows subscribers to access content they've paid for on a variety of devices using a single username and login on a website. Comparing to Apple’s 30% revenue cut, Google keeps 10% of revenues in transactions.
  • Besides Apple and Google, on Sep 28 2010, RIM also unveiled their BlackBerry Advertising Service, Later on Apr 8 2010, Apple moved further and announced iAd, a mobile advertising platform allowing third-party developers to directly embed advertisements into applications sold in App Store.
  • Apple introduced Game Center on April 8, 2010.
  • Revenue model trendASP decreasingIn-app purchase on riseMobile apps are encountering strong price competition and buzz matters. If higher usage and impressions can be translated into large numbers of ad impressions or full version purchase of the app, a free app may potentially generate more revenue. Following that, developers should also evaluate available business model with their selected platform. App developers may consider using free or freemium/lite version models when designing their business models
  • Platform-based app stores are two-sided catalyst platforms as economic platforms In app developer side, app stores provide platforms for app developers to develop and publish monetizable apps, representing to users directly. It was not easy in the past when the old app stores were mostly held by mobile operators and based on fragmented platforms. The scale of economies could not afford direct sales from app developers until platform-based app stores rolled out.In the other side, app stores also attract users with free apps, various paid apps, ease of access, and instant download that users can access anytime and anywhere. Particularly to platform-based app stores, app stores also take a strategic role in platform and device adoption in smartphone market by apps of all kinds and network effects amongst users.
  • Platform based mobile app stores

    1. 1. Platform and Marketing Strategies of Platform-Based Mobile App Stores <br />Reiser Wang <br />1<br />
    2. 2. Research Motivations<br />Smartphone industry<br />“Destructive innovations”<br />Changes of user behaviors (in 2 years)<br />Smartphone adoption<br />App mania<br />Change of mobile apps<br />App developers: gold rush<br />2<br />
    3. 3. 3<br />Research Objectives<br />What kind of strategies would be appropriate for platform-based app stores to pursue potential opportunities and avoid threats in the view of a multi-sided catalyst platform?<br />What are the business and marketing strategies should application developers adopt to maximize their potential revenue opportunities?<br />
    4. 4. Outline<br />
    5. 5. Landscape of Smartphone <br />Source: (Weinberg, 2009) and Wikipedia<br />
    6. 6. Worldwide smartphone volume by OS<br />Source: Wikipedia and IDC<br />
    7. 7. 7<br />Smartphone Adoption On The Rise<br />Source: (comScore, 2011)<br />
    8. 8. App Stores<br />Mobile application stores (app stores) are storefronts, either embedded as an application in the mobile headset or found on the Internet, offering mobile application download for mobile subscribers. <br />
    9. 9. 9<br />Mobile App Store<br />In early 2000s, app stores were centered on providing simple apps and the store were hosted by MNOs.<br />Value-added service<br />Increase ARPU<br />In Jul 2008, Apple Inc. introduced App Store, a service for the iPhone, iPod Touch and iPad<br />Hosted by platform<br />Direct sales model<br />70/30 revenue split<br />
    10. 10. Apple App Store<br />70/30 revenue sharing<br />One time developer fee ($99) and paid apps (from $0.99)<br />Direct sales to iOS device users<br />By passing MOs<br />Eliminate developers’ entry barrier by facilitating transaction, distribution, promotion<br />Source: IDC and Wikipedia. Accessed on March 25, 2010<br />
    11. 11. Android Market<br />
    12. 12.
    13. 13. 13<br />Market Perspectives <br />In a survey conducted by Gartner (Shen, 2010), while mobile operator portals remained the most accessed sources (35%) for application and content downloads, application stores went from nowhere to being used by 30% just in 2 years after Apple App Store.<br />
    14. 14. Analysis: Users<br />Differences in usage by regions<br />Different brand preference by gender and age<br />Shift of usage<br /><ul><li>Apps in rise
    15. 15. Surpass mobile web browsing</li></li></ul><li>Developers<br />What developers care<br /><ul><li>Market penetration
    16. 16. Revenue potential
    17. 17. App Store</li></ul>Platform preference<br />Android<br />iPhone<br />Source: (Vision Mobile, 2010)<br />
    18. 18. Revenue Models<br />
    19. 19. 17<br />Pay Per Download<br />Decreasing average selling price<br />Pricing matters <br />Developers could either give an app away for free or charge for it.<br />Some developers or companies opt to ship only paid versions when they have recognizable brands or apps. <br />For amateur app developers or companies with more original, less-recognizable titles tend to release free, free-trial, or lite versions to promote themselves in the app store. <br />
    20. 20. 18<br />Subscription<br />Mostly for contents<br />Apple Subscription Service<br />Google “One Pass”<br />
    21. 21. 19<br />In-App Purchase<br />App developers sell digital goods and subscriptions inside their apps<br />Apps can be distributed for free. For developers, they need to obtain users’ eyeballs in app stores, engaging players first with free-to-play models then monetizing content over time. <br />Demonstrate value first and offering flexible payment options to customers. <br />Allow developers to continuously create updates by adding new features or contents to gain more revenue from in-app purchase <br />
    22. 22. 20<br />In-App Advertising<br />According to Gartner, mobile application advertising will be generating a little under one third of the revenue generated by application stores, up from 16% in 2010. <br />Advantages of in-app advertising <br />Better and integrated experience<br />Better targeted audience<br />
    23. 23. Payment Platform<br />Social Network Platform<br />Mobile Advertising Platform<br />Affiliated Platforms<br />Payment Platforms<br />Developer Group<br />User Group<br />Mobile App Stores<br />Social Network Platforms<br />Mobile Advertising Platforms<br />
    24. 24. 22<br />Billing / Payment Platform<br />Billing and payment are key enablers of the business of mobile app stores <br />Operator billing<br />Direct end-to-end billing<br />Apple iTunes<br />Google Checkout<br />PayPal<br />
    25. 25. 23<br />Mobile Advertising Platform<br />Mobile platforms are expanding in mobile advertising<br />On Jan 5 2010, Apple announced their acquisition of mobile advertising network Quattro Wireless. Later in Apr 2010 Apple announced iAd<br />On May 27 2010, Google outbidded Apple and announced to acquire AdMob<br />Microsoft: AdCenter<br />BlackBerry Advertising Service<br />
    26. 26. 24<br />Mobile Advertising Platform<br />
    27. 27. 25<br />Social Network Platform<br />According to Gartner (Shen, 2010), social networking is one of the fastest growing apps in mobile apps<br />A important player in WOM marketing<br />Apple – Game Center<br />Third Party – Open Feint<br />
    28. 28. Mobile App Developers<br />26<br />
    29. 29. 27<br />Select A Platform<br />Developers are better off working on 1 or 2 platforms<br />Key factors for selecting a platform include current and future market share, market potentials, monetization options, capabilities of devices, has app stores, and size of developer community.<br />
    30. 30. 28<br />Choose A Business Model<br />Paid or Free apps?<br />External Factors<br />Internal Factors<br />Price Competition<br />Buzz Matters<br />
    31. 31. 29<br />Marketing<br />The vast majority usually take a brief spike of downloads upon release and quickly fall off as other newly-released apps fill in behind them<br />For all developers, there is an exposure bottleneck in mobile apps that needs to be conquered. <br />“Stand out in the crowd”<br />Keywords, use cases, etc<br />Dual business models<br />Limited discounts or free downloads<br />WOM marketing – solicit feedbacks, reviews<br />
    32. 32. 30<br />
    33. 33. Economic Platform<br />In (Evans & Schmalensee, 2007), economic catalyst is an entry that has <br />(a) two or more groups of customers; <br />(b) who need each other in some way; but <br />(c) who can’t capture the value from their mutual attraction on their own; and<br />(d) rely on the catalyst to facilitate value-creating reactions between them.<br />31<br />Source: (Evans & Schmalensee, 2007)<br />
    34. 34. 32<br />Mobile App Store as Catalyst Platform<br />App <br />Developers<br />Platform-Based <br />Mobile App Stores<br />Users<br />a way browse, search, download, pay for an app in an easier, streamlined, trust-worthy way <br />reaching out and selling their apps to users directly and reducing cost and barriers in transaction, distribution, and payment. <br />Payment<br />Social Networking<br />Mobile Advertising<br />
    35. 35. 33<br />Functions of Platform-Based App Stores in Catalyst Platforms <br />
    36. 36. 34<br />The Catalyst Framework for Mobile App Stores<br />
    37. 37. 35<br />The Catalyst Framework for Mobile App Stores <br />
    38. 38. 36<br />Conclusions<br />Platform-based mobile app stores demonstrate as an example of a catalyst business, which facilitates interactions between two or more groups of customers (developers and users) who need each other. At meantime, app stores increase own value and play a key role in mobile platform penetration.<br />We identified revenue options and business models of mobile apps, as well as three affiliated platforms that app store platforms must either integrate or partner with .<br />For app developers, selecting a platform, choosing a business model, monetization, and marketing are key factors in developing their business in app stores <br />