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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 .http://www.apple.com/pr/library/2010/01/05appstore.htmlhttp://www.apple.com/itunes/10-billion-app-countdown/
  • 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.
  • Transcript

    • 1. Platform and Marketing Strategies of Platform-Based Mobile App Stores
      Reiser Wang
      1
    • 2. Research Motivations
      Smartphone industry
      “Destructive innovations”
      Changes of user behaviors (in 2 years)
      Smartphone adoption
      App mania
      Change of mobile apps
      App developers: gold rush
      2
    • 3. 3
      Research Objectives
      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?
      What are the business and marketing strategies should application developers adopt to maximize their potential revenue opportunities?
    • 4. Outline
    • 5. Landscape of Smartphone
      Source: (Weinberg, 2009) and Wikipedia
    • 6. Worldwide smartphone volume by OS
      Source: Wikipedia and IDC
    • 7. 7
      Smartphone Adoption On The Rise
      Source: (comScore, 2011)
    • 8. App Stores
      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.
    • 9. 9
      Mobile App Store
      In early 2000s, app stores were centered on providing simple apps and the store were hosted by MNOs.
      Value-added service
      Increase ARPU
      In Jul 2008, Apple Inc. introduced App Store, a service for the iPhone, iPod Touch and iPad
      Hosted by platform
      Direct sales model
      70/30 revenue split
    • 10. Apple App Store
      70/30 revenue sharing
      One time developer fee ($99) and paid apps (from $0.99)
      Direct sales to iOS device users
      By passing MOs
      Eliminate developers’ entry barrier by facilitating transaction, distribution, promotion
      Source: IDC and Wikipedia. Accessed on March 25, 2010
    • 11. Android Market
    • 12.
    • 13. 13
      Market Perspectives
      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.
    • 14. Analysis: Users
      Differences in usage by regions
      Different brand preference by gender and age
      Shift of usage
      • Apps in rise
      • 15. Surpass mobile web browsing
    • Developers
      What developers care
      • Market penetration
      • 16. Revenue potential
      • 17. App Store
      Platform preference
      Android
      iPhone
      Source: (Vision Mobile, 2010)
    • 18. Revenue Models
    • 19. 17
      Pay Per Download
      Decreasing average selling price
      Pricing matters
      Developers could either give an app away for free or charge for it.
      Some developers or companies opt to ship only paid versions when they have recognizable brands or apps.
      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.
    • 20. 18
      Subscription
      Mostly for contents
      Apple Subscription Service
      Google “One Pass”
    • 21. 19
      In-App Purchase
      App developers sell digital goods and subscriptions inside their apps
      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.
      Demonstrate value first and offering flexible payment options to customers.
      Allow developers to continuously create updates by adding new features or contents to gain more revenue from in-app purchase
    • 22. 20
      In-App Advertising
      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.
      Advantages of in-app advertising
      Better and integrated experience
      Better targeted audience
    • 23. Payment Platform
      Social Network Platform
      Mobile Advertising Platform
      Affiliated Platforms
      Payment Platforms
      Developer Group
      User Group
      Mobile App Stores
      Social Network Platforms
      Mobile Advertising Platforms
    • 24. 22
      Billing / Payment Platform
      Billing and payment are key enablers of the business of mobile app stores
      Operator billing
      Direct end-to-end billing
      Apple iTunes
      Google Checkout
      PayPal
    • 25. 23
      Mobile Advertising Platform
      Mobile platforms are expanding in mobile advertising
      On Jan 5 2010, Apple announced their acquisition of mobile advertising network Quattro Wireless. Later in Apr 2010 Apple announced iAd
      On May 27 2010, Google outbidded Apple and announced to acquire AdMob
      Microsoft: AdCenter
      BlackBerry Advertising Service
    • 26. 24
      Mobile Advertising Platform
    • 27. 25
      Social Network Platform
      According to Gartner (Shen, 2010), social networking is one of the fastest growing apps in mobile apps
      A important player in WOM marketing
      Apple – Game Center
      Third Party – Open Feint
    • 28. Mobile App Developers
      26
    • 29. 27
      Select A Platform
      Developers are better off working on 1 or 2 platforms
      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.
    • 30. 28
      Choose A Business Model
      Paid or Free apps?
      External Factors
      Internal Factors
      Price Competition
      Buzz Matters
    • 31. 29
      Marketing
      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
      For all developers, there is an exposure bottleneck in mobile apps that needs to be conquered.
      “Stand out in the crowd”
      Keywords, use cases, etc
      Dual business models
      Limited discounts or free downloads
      WOM marketing – solicit feedbacks, reviews
    • 32. 30
    • 33. Economic Platform
      In (Evans & Schmalensee, 2007), economic catalyst is an entry that has
      (a) two or more groups of customers;
      (b) who need each other in some way; but
      (c) who can’t capture the value from their mutual attraction on their own; and
      (d) rely on the catalyst to facilitate value-creating reactions between them.
      31
      Source: (Evans & Schmalensee, 2007)
    • 34. 32
      Mobile App Store as Catalyst Platform
      App
      Developers
      Platform-Based
      Mobile App Stores
      Users
      a way browse, search, download, pay for an app in an easier, streamlined, trust-worthy way
      reaching out and selling their apps to users directly and reducing cost and barriers in transaction, distribution, and payment.
      Payment
      Social Networking
      Mobile Advertising
    • 35. 33
      Functions of Platform-Based App Stores in Catalyst Platforms
    • 36. 34
      The Catalyst Framework for Mobile App Stores
    • 37. 35
      The Catalyst Framework for Mobile App Stores
    • 38. 36
      Conclusions
      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.
      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 .
      For app developers, selecting a platform, choosing a business model, monetization, and marketing are key factors in developing their business in app stores