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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.

Platform based mobile app stores Platform based mobile app stores Presentation Transcript

  • Platform and Marketing Strategies of Platform-Based Mobile App Stores
    Reiser Wang
    1
  • 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
    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?
  • Outline
  • Landscape of Smartphone
    Source: (Weinberg, 2009) and Wikipedia
  • Worldwide smartphone volume by OS
    Source: Wikipedia and IDC
  • 7
    Smartphone Adoption On The Rise
    Source: (comScore, 2011)
  • 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
    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
  • 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
  • Android Market
  • 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.
  • Analysis: Users
    Differences in usage by regions
    Different brand preference by gender and age
    Shift of usage
    • Apps in rise
    • Surpass mobile web browsing
  • Developers
    What developers care
    • Market penetration
    • Revenue potential
    • App Store
    Platform preference
    Android
    iPhone
    Source: (Vision Mobile, 2010)
  • Revenue Models
  • 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.
  • 18
    Subscription
    Mostly for contents
    Apple Subscription Service
    Google “One Pass”
  • 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
  • 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
  • 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
  • 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
  • 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
  • 24
    Mobile Advertising Platform
  • 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
  • Mobile App Developers
    26
  • 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.
  • 28
    Choose A Business Model
    Paid or Free apps?
    External Factors
    Internal Factors
    Price Competition
    Buzz Matters
  • 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
  • 30
  • 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)
  • 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
  • 33
    Functions of Platform-Based App Stores in Catalyst Platforms
  • 34
    The Catalyst Framework for Mobile App Stores
  • 35
    The Catalyst Framework for Mobile App Stores
  • 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