Fostering innovation factors that attract and retain third party developers in mobile ecosystems

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The popularity of smartphones and the related growth of mobile application created a need for mobile platform owners to open their software platforms up to third party developers in order to meet user …

The popularity of smartphones and the related growth of mobile application created a need for mobile platform owners to open their software platforms up to third party developers in order to meet user demand for mobile applications. This external innovation provides a tremendous opportunity for mobile platform owners to develop a volume and diversity of products they could not develop in-house, but it also presents challenges in attracting a sufficient number of developers and users in order to harness the two-sided and same-sided network effects required to successfully cultivate a robust mobile ecosystem. By developing a research framework based on theoretical and industry literature to the mobile industry, we interviewed mobile app developers for the iOS, Android, and Windows Phone platforms as well as an independent expert specializing in research of the telecommunications industry which provided a list of factors relating to what motivates third party developers to select a particular ecosystem. Factors are presented in terms of economic considerations, the boundary resources within the mobile platforms, the related development community, and the reach the ecosystem provides. These factors are detailed and compared concluding that monetary reward, user engagement and market share the most dominant factors influencing developer choice.

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  • 1. Fostering innovation: Factors that attract and retain third party developers in mobile ecosystems SINAN DENIZ, MSC, DEPARTMENT OF INFORMATICS FERDIA KEHOE, MSC, DEPARTMENT OF INFORMATICS
  • 2. Outline of the research • Master thesis presented in June 2013 • Study period February – June 2013 • With the objective to investigate factors which attract and retain third party developers in mobile ecosystems • Qualitative research interviewing with – Three third party developers for iOS, Android, and Windows Phone platfroms + – An independent research expert of the telecommunications industry
  • 3. The phenomenon under study • Increased importance of mobile app developers caused by the introduction of a smartphone App market App developers App users Creators of the platforms’ content Users of the platforms’ content A classical two-sided market (Eisenmann et al., 2006; Hidding et al., 2011)
  • 4. Motivation of the studied phenomenon • Collaboration and interoperability between parties in the new era of software ecosystem (Campbell & Ahmed, 2011). • Sharing the risk and cost of development with third party developers provides an opportunity to leverage an enormous pool of innovation (Boudreau & Lakhani, 2009). • This adds a layer of complexity due to the dependencies between platform provider and third party developers (Bosch & Bosch-Sijtsema, 2010). • Cultivating a platform is substantial task and many technically good platforms have failed due to the lack of developers (Rochet & Tirole, 2003).
  • 5. Research question and purpose » What factors attract and retain third party developers in mobile ecosystems? • The purpose is to demonstrate necesssary elements to cultivate a healthy ecosystem (Iansiti & Levien, 2004) from a developer perspective in which durable opportunities will be presented to developers to function successfully.
  • 6. Mobile ecosystem • Mobile ecosystem refers to an informal network of independent participants who are connected to and benefit from an underpinning software platform and have a positive impact on the economic success of that platform (Kittlaus & Clough, 2009). Mobile application developers Network Operators Handset manufacturers Users Mobile platform provider Two-sided network effects Same-sided network effects Two-sided network effects Same-sided network effects Visualization of mobile ecosystems [Adapted from Tuunainen and Tuunanen, 2001 & Constantinou, 2012 ]
  • 7. Theoretical framework • Centered around four main themes •Mobile ecosystems & two- sided network effects (Cusumano, 2010; Rochet & Tirole, 2003; Eisenmann et al., 2006; Basole & Karla, 2011; Iansiti & Levien, 2004) •Intrinsic motivations (Boudreau & Lakhani, 2009; Hsieh & Hsieh, 2013) •Same-sided network effects and coopetition (Eisenmann et al., 2006; Walley, 2007) •Switching costs and stored value (Klemperer, 2008; Hsieh & Hsieh, 2013) •Boundary Resources (De Souza et al., 2004; Ghazawneh & Henfridsson, 2013) •Platform governance (Boudreau & Lakhani, 2009; Gawer & Cusumano, 2002; Müller et al., 2011) •Extrinsic motivations of developers in competitive markets (Boudreau & Lakhani, 2009; Hsieh & Hsieh, 2013) •Business models (Vannieuwenborg et al., 2012) Economic Boundary Resources Reach Community and developer network
  • 8. Research methodology • Qualitative research interviewing approach was selected as research in this area is limited and no base of tested provisional factors exists on which to draw • Descriptive format of a research approach was adopted since it provides inference to the best available explanation for developer choice • Kvale & Brinkmann’s (2009) seven stages of qualitative research interviewing were followed • Four independent interviews are conducted – iOS/ Android Mobile Consultant – iOS/ Android Mobile Architect – Windows Phone Mobile Freelance Consultant – Telecommunications industry research expert
  • 9. Research framework • The complete research framework was constructed in line with our theoretical framework by reviewing online tech industry press articles and respected sources such as IBM, VisionMobile, and Gartner • Factors coming out from that review were assessed based on their number of mentions in online tech industry trade press – The Technorati Authority was used in assessing the top rated sources as it measures the linking behaviors of the given website. Theme Theory Provisional factors Economic Extrinsic motivations of developers in competitive markets Business models Number of paid applications Number of available revenue models Boundary resources Boundary resources Platform governance Software fragmentation Device fragmentation Community and developer network Intrinsic motivations Same-sided network effects and coopetition Switching costs and stored value Size of development community Reach Mobile ecosystems & two-sided network effects User engagement Market share
  • 10. Findings and analysis I - Economic Potential for differentiation Strong market share - - Causal connection Strong causal connection + Positive influence Negative influence Economic attraction User engagement Revenue models + ++ Willingness to pay + + +
  • 11. Findings and analysis II – Boundary resources Software fragmentation Stable development environment Hardware fragmentation Rich API Boundary resources attraction Native SDK Efficient app publishing Developer- focused platform governance Poor documentation - - - ++ + + + + + Causal connection Strong causal connection + Positive influence Negative influence -
  • 12. Findings and analysis III – Community and developer network Perception of the mobile platform owner Affiliation to development environment Investment in training Reputation - +/- + Causal connection Strong causal connection + Positive influence Negative influence Development community attraction Engaged development community Size of the development community + +++
  • 13. Findings and analysis IV - Reach Multiple devices Strong market share Developed market penetration - + + Causal connection Strong causal connection + Positive influence Negative influence Reach attraction User engagement ++ User feedback mechanism + +
  • 14. Compiled factors Theme Factors Key factors Supporting factors Economic  Strong market share  User engagement  Willingness to pay  Revenue models  Potential for differentiation Boundary resources  Stable development environment  Developer-focussed platform governance  Native SDK  Rich API  Lack of software fragmentation  Lack of hardware fragmentation  Good documentation  Efficient app publishing Community and developer network  Affiliation to development environment  Engaged development community  Reputation  Investment in training  Positive perception of platform owner  Size of the development community Reach  Strong market share  User engagement  Developed market penetration  Multiple devices  User feedback mechanism
  • 15. Thank you ANY QUESTIONS? PLEASE CONTACT US © Sinan DENIZ gif12sde@student.lu.se © Ferdia KEHOE gif12fke@student.lu.se