Developer Economics 2011

© VisionMobile 2011 | www.DeveloperEconomics.com
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About VisionMobile Contents
Key takeaways 3
VisionMobile is a leading market analysis and strategy firm,
for all the things connected. We offer competitive analysis,
Chapter 1:
market due diligence, industry maps, executive training and
Developer Mindshare:
strategy, ranging from the industry's hottest trends to under
winners and losers in the platform race 11
the radar market sectors. Our mantra: distilling market
noise into market sense.
Chapter 2:
VisionMobile Ltd. Taking applications to market 26
90 Long Acre, Covent Garden,
London WC2E 9RZ Chapter 3:
+44 845 003 8742 The building blocks of mobile apps 43

www.visionmobile.com/blog
Chapter 4:
Follow us: @visionmobile
Brands go mobile 51

About BlueVia
BlueVia is the new global developer platform from
Telefonica that helps developers take apps, web services,
and ideas to market. BlueVia is built on four Founding
principles: Scale, Tools, Business Models, and Path to
Market. BlueVia offers ground breaking, zero risk, business
models for developers, along with 'mix & match' models to
create multiple revenue streams.

License Also by VisionMobile
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Attribution 3.0 License.
The complete map of the mobile industry
Any reuse or remixing of the work should be
landscape, mapping 1,350+ companies
attributed to the Developer Economics 2011
across 85+ market sectors.
report.

Copyright © VisionMobile 2011 Available in wallchart and PDF format.
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Disclaimer
VisionMobile believes the statements contained in this
publication to be based upon information that we consider
reliable, but we do not represent that it is accurate or
complete and it should not be relied upon as such. Opinions
expressed are current opinions as of the date appearing on
this publication only and the information, including the
opinions contained herein, are subject to change without
notice.

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this publication.

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Key messages

The race for developer mindshare
Use of mobile web accelerates. The last year has seen many twists and turns in the
race of mobile platforms to capture developer mindshare. Mobile web as a platform has
seen an impressive upturn in usage, and is now in third position in our Developer
Mindshare Index. Android and iOS continue to lead with 67% of developers currently
using Android and 59% using iOS.

Windows is not yet the third horse in the three-horse mobile race. Use of
Windows Mobile has dropped among developers in the last year, while Windows Phone
is not yet seen by developers as a commercially viable platform. Yet Windows Phone 7
has managed to establish itself in the number two spot after Android in our Developer
Intentshare Index, among platforms where developers plan to invest. Microsoft’s
advantage comes from the influx of PC and Xbox developers, Microsoft’s best-in-class
tools and the promise of a substantial user base with the Nokia deal.

Symbian, Java abandoned. Symbian and Java ME are the two platforms with the
highest developer abandonment rates; nearly 40% of developers currently using
Symbian and 35% of developers currently using Java ME are planning to drop the
platforms. Java ME is suffering from negative hype despite having been embedded on
more than three billion handsets. Symbian is now officially a platform with an expiry
date, with the Nokia Symbian handset line-up set to be discontinued.

Experimentation on the rise. Developers are increasingly experimenting with more
and more platforms and transitioning to new ones. Developers use on average 3.2
platforms concurrently based on our sample of 850+ online respondents, representing
a 15% increase from last year’s figure.

Show me the money
Money can't buy you love, but users can! Large market penetration (the ability to
reach users) is the most crucial factor for platform selection, important for nearly half
of the respondents across all platforms. Meanwhile, the ability to make money was
deemed important in platform selection by just a quarter of respondents, alongside the
low cost development tools and the ability to quickly code and prototype.

Losing money. In the gold rush to the applications economy, not everyone is making
money. About a third of respondents make less than $1,000 USD per application in
total, which is loss-making given that an application often takes months to develop.

Commissioned vs. direct monetisation. Approximately 50% of app developers in
our survey make money through a salary or commission, confirming that corporate
monetisation is becoming as important as making money directly through applications.
For developers making money directly, the top revenue model is pay-per-download,
followed by advertising and freemium (free download, then pay to upgrade).

Platform revenue potential. Not all platforms are born with equal revenue
potential. Our research revealed large discrepancies across platforms in terms of the
revenues applications are bringing to developers. iOS topped the chart, making 3.3x

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more money per app than Symbian developers followed by Java ME (2.7x) and
BlackBerry (2.4x). Android (1.7x), mobile web (1.6x) were the weakest performing
platforms in terms of revenue per app and only ahead of Symbian (1.0).

Role of operators. Traditionally, application developers have been cold and
uncertain as to the role the operators can play in a software world. While the majority
of developers agree that the role of operators is to delivery data access (61%) and voice
(43%), there is no consensus on the role of operators in software. Developers across
regions disagree on whether operators should be a payment gateway, an API platform,
build the best mobile services, or just leave developers alone.

App stores deliver fragmented reach
App stores are a one-way street. App stores have irreversibly changed the
landscape of mobile app distribution. Today, app stores are the primary go-to-market
channel for 45% of mobile app developers across the eight major platforms. Use of
other application distribution channels has consistently declined across the board.
Moreover, operator portals, whose ‘walled gardens’ once dominated content
distribution, are now paling in significance compared to app stores.

App stores deliver reach. Reach is by far the most important reason behind
developers’ preference for app stores as a distribution channel. More than 50% of
developers distributing through Apple, Google, Nokia or BlackBerry app stores cite the
ability to sell to more users as the primary reason for app store selection.

App store fragmentation is an under-hyped challenge for developers. Each of the
fifty-plus app stores available has its own developer sign-up, app submission process,
artwork and paperwork requirements, app certification and approval criteria, revenue
model options, payment terms, taxation and settlement terms. The marginal cost of
distributing an application through one more app store is significant, contrary to
popular perception.

One size doesn’t fit all
Developer segmentation is as sophisticated as consumer segmentation. But in
whatever metric or measure is used, one needs to acknowledge that there are several
types of “developers” out there, from hobbyists and students, to start-ups, self-financed
professionals, commissioned developers, digital agencies, system integrators, as well as
developers working within established businesses developing B2B or B2C apps – all
having different incentives, aspirations, priorities, needs and wants.

Attracting talent. Developers who are experienced with PC/Internet software
development are jumping into mobile. However, our research shows that aside from
Apple and Microsoft, platform vendors are not attracting enough developers with
experience in mobile or PC/Internet development.

Developer-market balance. Android is the one and only platform that is tri-
laterally adopted by developers across all three major continents active in application
development - Europe, North America and Asia. On all other platforms, there is an
imbalance of developer supply and market demand across the globe. iOS is lagging in
developer mindshare in Asia while BlackBerry developers are almost completely lacking

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in Europe. The traditional sweet spot for Java developers has moved out of Europe to
emerging markets, with 42% more respondents coming from Asia, Africa and South
America. Flash Lite has weak supply in South East Asia where the platform can deliver
best-in-class experiences on mass-market phones.

Building mobile apps
Learning curve. Contrary to popular perception, mobile web isn’t such an easy
platform to learn, ranking sixth in terms of learning curve. This is due to the need for
web developers to learn a complex stack of languages and technology frameworks
across client and server environments, in addition to having to battle with the
challenges of cross-browser portability.

Fragmentation. Despite the bad press, Google is managing to contain Android
fragmentation relatively well. On the contrary, it’s BlackBerry and Java ME that exhibit
the greatest amount of fragmentation, with BB and Java developers needing to produce
almost twice the number of app versions compared to Android developers.

Localisation. Localisation will soon become a fundamental issue for mobile
developers, as it becomes easier to distribute apps globally, and to develop regionally-
sensitive apps and content like news, music and social networks. Developers who are
accustomed to creating apps for global distribution (for example Java ME developers)
in their majority are reporting localisation issues.

Cloud APIs. Cloud connectivity is not just a fad among developers; it’s also where a lot
of the innovation is taking place. We found that iOS, Android and mobile web
developers are the most active users of cloud APIs, while BlackBerry and Java
developers were the late adopters of the ‘cloud’.

Multi-screen future. The developer ecosystem is gearing up for a multi-screen
future. In our research, almost 50% of respondents who develop for smartphones also
develop for mid-range (messaging and Internet capable) phones. Nearly 25% of
Android, iOS, Java, mobile web and Qt respondents are planning to target TV and set-
top boxes in the future. Moreover, our research confirmed that mobile web is also the
most versatile platform, with mobile web developers currently targeting on average 2.5
different screen types.

Brands drive mobile
Brands go mobile Where there is a company website or a corporate intranet today,
there will be a mobile app tomorrow. Such is the momentum behind consumer brands
and virtually every self-respecting company out there, whether it’s B2C apps for
enhancing the core business, or B2B for mobilising the corporate intranet. More
importantly, while app stores kick-started the mobile app economy, it is brands that are
now fuelling it.

Brand journey through mobile. Despite the diversity across verticals and regions,
we found that all companies go through a three-stage journey as they extend their
digital strategies into mobile. In their first steps in going mobile, “newbie” brands think
of an app as a way to ‘advertise’ whatever product or service they are providing. As they
get Street Smart, brands ask, “How can we use apps to drive our core business?” And

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finally as Connoisseurs, the question becomes “Can we turn apps into a new, revenue
generating business?”

The platform conundrum. For brands, extending their presence to mobile is a very
different beast, compared to any other digital medium. Whereas on the web one needs
compatibility with two or three mainstream browsers to reach 80% of users, going
mobile means using the top three or four mainstream native platforms (iOS, Android,
Symbian and BlackBerry) to reach just over 20% of the devices sold, on average.

Platform priorities For companies going mobile, platform priorities are mixed, but
the core challenge is common – market penetration and reach across the customer
base. Organisations developing B2C apps (targeted at consumers) are extending their
offering first Apple and then to Android, to mobile web, to BlackBerry and finally to
Windows Phone 7. For B2B apps (applications paid by the corporate IT manager or
CIO), HTML is already the platform of choice- not just for deployment on mobile web
browsers, but also by converting HTML and JavaScript into native iPhone and Android
apps using tools from companies such as Appcelerator, PhoneGap, RhoMobile and
Sencha.

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About Developer Economics
Welcome to Developer Economics 2011, the quintessential mobile developer research
report. In this second annual report, we explore both what drives developer mindshare,
and how brands are fast-forwarding into the world of mobile.

Developer Economics 2011 takes the reader across the entire developer journey, from
the shift of mindshare and why “users can buy you love,” to how money is made in
mobile. It covers the hottest issues, from app design and promotion to monetisation
and user support.

In this year’s research, we have delved into the world of brands that are going mobile,
to understand what makes them tick, and how they are planning to conquer the mobile
world. While app stores initially kick-started the mobile app economy, it is brands that
are now fuelling it.

We spent the last few months quizzing developers and industry executives about the
future of mobile. Our research included 20+ industry executives, along with 900+
developers from 75+ countries working on 8+ major platforms.

We believe our work has yielded important insights about the future of mobile
development and hope you enjoy reading this report as much we enjoyed writing it!

Matos, Elizabetta, Andreas, Michael, Anne and Vanessa at VisionMobile.
@visionmobile
www.visionmobile.com/blog

Thank you!
We‘d like to thank the executives and developers who helped make this report a reality
– those who spent the time on the phone or online to offer a glimpse of the world
through their eyes, with its ups and downs. You know who you are.

We’d also like to thank the many companies who helped us reach out to developers –
Distimo, Enough Software, Flurry, Funambol, GetJar, LiMo Foundation, MEX,
Microsoft, Mobile Monday London, Nokia, Oracle, Qualcomm, RIM, WAC, WIP –
without which we would not have been able to reach such a diverse spectrum of
developers.

And of course – a huge thank you to James Parton and the team at Telefonica, without
whose financial support this research would simply not have been possible.

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Welcome to Developer Economics 2011
How quickly time flies!

Last year we, like VisionMobile, felt there was a real gap in the market for a piece of
research that credibly identified the issues facing developers in the mobile space.

Based on the response to 2010’s inaugural report, it seems you agreed with us. The
success of the publication really surpassed our expectations. The report was
downloaded over 10 thousand times, while TechCrunch called it “one of the most
profound [reports on mobile development]…to date”.

We’re delighted to be supporting the project once again in 2011, as this allows the
research to be made freely available for download. Telefonica remains steadfastly
committed to understanding the needs of developers, in order to help shape the
BlueVia roadmap, and 2010’s Developer Economics findings were a key input into the
thinking that produced the initial release of BlueVia.

This year’s edition delves into the hottest issues in mobile apps: which platforms gained
and lost developer mindshare, what are the most popular revenue models, which go-to-
market channels are the fastest to pay, how apps in smartphones vs. tablets vs. TVs will
play a role in the future, and more.

We have more than doubled the number of respondents, compared to 2010’s research,
with developers now representing 75 countries. For the first time, we have added
insight into digital strategies from over 50 leading international and regional brands,
through 20 one-to-one interviews with digital agencies, media, retail and Internet
companies.

I hope you enjoy reading the report as much as we have enjoyed working with
VisionMobile to deliver it.

James Parton, Head of BlueVia Marketing
@jamesparton
www.bluevia.com

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Research methodology
The Developer Economics 2011 research was conducted between January and April
2011. The research is based on a large-scale online developer survey, developer
interviews, and interviews with industry executives working in commercial
organisations and digital agencies.

Among the 900+ participating developers, 850+ took our online survey. These
developers represented 75 countries, across eight major platforms: Android, iOS,
Windows Phone, Symbian, Java ME, MeeGo, mobile web (HTML and JavaScript) and
Qt. Each platform was represented by at least 50 developers who reported spending the
majority of their time on that platform. To remove platform bias, we averaged all
results presented in this research across these eight major platforms.

The developers that took part in our online survey came in their majority (90%) from
Europe, North America and Asia while another 10% came from South America, Africa
and Oceania. Respondents included both novice and seasoned developers, with an
average of three years mobile experience, and six years PC development experience.

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Developers had a mix of roles, with 50% involved in a technical role, another 25%
employed in a commercial role, and 20% being hobbyists. Note that many respondents
were winners and runner-ups of developer awards, including Nokia’s Calling All
Innovators and the Android Challenge. Respondents also included five Microsoft
MVPs, and 16 Forum Nokia Champions.

In addition to the online survey, one-to-one interviews were carried out with over 40
developers. This group ranged from hobbyists to CEOs of games companies, and from
one-person startups to technology giants.

Moreover, 21 one-to-one interviews were carried out with senior executives from a wide
spectrum of commercial organisations and digital agencies. All the executives we talked
to had decision-making authority, and the majority worked within or with marketing
and strategy departments. Sectors covered directly or indirectly included digital
agencies, media, retail, pure Internet, telecoms, FMCGs (fast-moving consumer goods),
sports, banking & financial, marketing & communication, health, automotive, travel,
leisure, and music.

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WHO IS WINNING THE RACE?

1. Developer Mindshare:
winners and losers in the platform race
The impact of apps and software ecosystems in the mobile industry has been nothing
short of astonishing.

Apps have turned the handset manufacturer business upside down in the last two years,
as players with strong software ecosystems like Apple and Google replaced the weakest
of the 'old guard’ in the leaderboard of top-five handset vendors by unit sales. Nokia
had clung for too long to the 10-year-old Symbian platform – and at the last minute it
had to “jump off a burning platform” by partnering with the lesser of two evils
(Microsoft rather than Google) to salvage its smartphone line. Sony Ericsson and
Motorola failed to recapture the glory of the RAZR and Cybershot days, and are
dropping off the top-ten chart.

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The total market share captured by the top-five handset OEM leader-board has shrunk
from 80% to under 60% in less that two years, as Apple stormed the high-end
smartphone market and modular platforms from Google and MediaTek made it
possible for tens of low-margin assemblers to take up around 30% of global handset
sales. The number two and three handset OEMs Samsung and LG are the only ones
who managed to survive with only minor scratch wounds, maintaining their sales
ranking by aggressively responding to mobile operators’ demand for smartphones with
numerous Android phone and tablet models.

Software has also disrupted the network operator world in many ways. Today, software
innovation outpaces network innovation by at least a factor of five: application
developers often reach market in only three to six months, while operators take 18-24
months to launch a new service. In other words, it has become impossible to innovate
outside software. Any such innovation will be outrun and marginalised by more agile,
more nimble software-led players.

More importantly, software-led players like Apple and Google have benefited at the
expense of the very network operators who funded their entry into mobile; the vast
majority of Android handset models produced in 2008-2010 have been sponsored by
operators in order to attract new subscribers, while the majority of iPhones have been
subsidised as part of a 12-24 month telco contract. It is these same software-led players
that are now competing with operator services and challenging their established control
points, including location look-ups, billing, service discovery, authentication. Software-
led players are even questioning the operator hold on mobile termination (see Google
C2DM) and subscriber activation (see soft SIMs).

As telecoms players are dragged to the software era, network operators and handset
OEMs need to become ‘platforms’ (enablers) for developer innovation. They also need
to rebuild their strategies on the game rules of software economics, as we shall see next.

The impact of software economics

The single biggest surprise that software has brought to the mobile industry has been
the change of economics – from supply-side economies of scale to demand-side
economies of scale.

The mobile industry has been built from the ground-up on supply side economies of
scale; billion-dollar investments behind handset vendors have created production
powerhouses where the few are able to dramatically drop supply and manufacturing
costs. This is why Nokia has been able to buy handset components in far higher
volumes and at far lower prices than everyone else, allowing Nokia to dominate
emerging markets in terms of price points. Supply-side economics of scale are common
sense: the bigger the company, the lower the costs; the lower the prices, the bigger the
sales.

What software introduced was demand-side economies of scale. Also known as
“network effects,” these economies are driven by demand, i.e., the number of users or
developers of a software platform. A classic case of network effects is a telephone
network: the utility of a network increases with the size of the network. The more users,
the more valuable the network is to those users. Software platforms like Windows,
Android and iOS operate based on network effects: the more users, the more devices

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are sold, the more developers are attracted to the platform, the more apps are
developed, the more users, etc. The next diagram illustrates network effects in the case
of Google’s Android platform.

The textbook ‘worst practice’ here is Nokia: the Finnish OEM has been excelling at
creating supply-side economies of scale. With over 400 million devices shipped in
2010, Nokia can demand unbeatable pricing from its suppliers, and thus has an
inherent advantage in cost-sensitive emerging markets.

At the same time, Nokia – like most of the traditional top-five OEMs including
Motorola and Sony Ericsson - failed to understand the demand-side economies of scale
practiced by Google and Apple. For too long, developers were a second priority for
Nokia’s Symbian and Java platforms. Lacking in the attractiveness of both its route to
market (Ovi) and its platforms, Nokia quickly saw developer mindshare migrate to iOS
and Android. Both these competing platforms managed to build self-sustaining
network effects of unprecedented scale; for example, Apple reached 10 billion app
downloads in the space of 30 months. Eventually, Nokia had to backtrack against 20
years of corporate strategy and outsource its smartphone platform to a coopetitor –
Microsoft – whose Windows business has flourished due to network effects.

Winners and losers in the platform race
Since the beginnings of the smartphone era, the platform race has never been so fast
moving. In the space of two years, Apple’s iOS and Google’s Android have captivated

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the attention of users, industry brands and mobile developers alike. Nokia’s Symbian –
once the unquestioned king of mobile platforms, having been deployed in over 500
million devices as of Q1, 2011 – is now officially being phased out, while Nokia’s
quarterly smartphone sales volumes have for the first time fallen behind Android.
Microsoft’s Windows Phone 7 is making a strong comeback thanks to best-in-class user
experience and developer tools. However, Microsoft has a challenging year ahead as it
tries to stand on the shoulders of Nokia to compete in terms of user base with Apple
and Google.

Mobile web (the platform for apps written in HTML or JavaScript) is continually
increasing in terms of developer attention and media hype. At the same time, HTML
apps can’t compete on equal grounds with native platforms, in terms of user experience
or depth of API reach. Meanwhile Java, with its broken promise of write-once-run-
anywhere, is fast being eclipsed out of the smartphone-centric mobile developer
agenda, with Java’s advantages in the feature phone market largely being ignored by
developers.

All in all, the platform race has not only intensified, but also sped up. Yet, amidst all the
industry hype, there is no accurate metric of how mobile platforms are falling in or out
of favour with developers.

Our Developer Mindshare Index does exactly that, by tracking which mobile platforms
are mostly used among developers. The next chart shows the top eight mobile
platforms, and how the Developer Mindshare Index has changed in the last year.

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The past year has seen many twists and turns in the mobile platforms used most by
mobile developers.

Developers are increasingly experimenting with more and more platforms. Developers
use on average 3.2 platforms concurrently based on our sample of 850+ online
respondents. This represents a 15% increase from last year’s figure, indicating how
developers are more willing to experiment with new platforms and actively
transitioning to new ones. In parallel, more experienced developers are entering the
mobile app economy, which helps boost the average platform numbers.

Android and iOS have further solidified their top two positions in the Mindshare Index,
and are now established in a league of their own in terms of both developer ecosystem
and user base. Apple’s iOS stands at over 350,000 apps and 110 million devices sold,
while Android stands at over 200,000 apps and 110 million devices sold, as of Q1 2011.

Mobile web as a platform has seen an impressive upturn in usage over the last year, and
is now in third position in the Developer Mindshare Index. The popularity of mobile
web as a platform is driven by four factors:

1. Mobile web is the primary choice for cross-platform development and for addressing
the long tail of device models beyond iPhone and Android.

2. Segments of web developers familiar with HTML and JavaScript development are
being attracted to develop for mobile devices. Moreover, web developers deal with
fragmentation (resolution, aspect ratio, input methods) as part of their day-to-day work
and so are well equipped to deal with the multi-platform nature of mobile.

3. Companies across industry verticals – from brands to banks – who are extending
their digital strategies into mobile apps are using the mobile web as a low-cost, mass-
reach platform across devices globally. Similarly, corporate IT departments that need to

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take their legacy intranets to mobile devices are choosing mobile web as the default
platform.

4. A host of HTML-to-native development tools are helping HTML/JavaScript
developers target smartphone native app markets, as well as the long tail of mass-
market phone browsers. Examples include Appcelerator, PhoneGap, RhoMobile,
Sencha and The M Project. Moreover, native apps can be designed to encapsulate
functionality in the form of web content, which eases cross-platform development.

Windows is not yet the third horse in the three-horse mobile race. Use of Windows
Mobile has dropped among developers in the last year, due to two reasons. First, the
older Windows Mobile has been dying a slow death in the last two years, with Microsoft
unable to match Apple or Google in terms of device sales or developer hype. A large
number of Windows Mobile MVPs (most valuable professionals - the acknowledged
community opinion leaders) have been attracted by the strength of Apple’s consumer
apps proposition and switched to developing iPhone apps. Second, the newer Windows
Phone is suffering from lacklustre sales, estimated at just over three million handsets
sold by the end of Q1, 2011, according to Gartner and IDC figures.

Java ME and Symbian platforms show a steady mindshare decline. Java ME is suffering
from negative hype despite having been embedded on more than three billion handsets.
Symbian is now officially a platform with an expiry date, with the Nokia Symbian
handset line-up set to be discontinued.

Across mobile platforms, Android is not just the king of developer mindshare, it’s also
the easiest platform for developers to experiment with. This is for several reasons:

1. Android has fewer restrictions on ‘deep’ APIs like access to the home screen,
multimedia codecs, SMS texting, telephony and streaming functions when
compared to the iPhone.

2. Android Market offers instant publishing, versus Apple’s ‘undocumented’ app
approval policy. That allows developers to iterate quickly on Android applications,
versus waiting for Apple’s approval process to complete.

3. Applications on the Android are easy to sideload (i.e., to install from a connected
PC, rather than from an official app store). This facilitates beta testing among peers,
without having to meet quality standards needed for publishing an app to the Apple
App Store.

What’s even more telling of the future of the platform race? Our Developer Intentshare
Index, tracking the top-eight mobile platforms developers are planning to use.
Combined an indication of which platforms developers are abandoning, it shows the
ebb end flow of developer interest across mobile platforms.

Despite being a young, six-month old platform, Windows Phone 7 has managed to
establish itself in the number two spot, claiming nearly 35% in the Developer
Intentshare Index. Microsoft’s advantage comes from the strength of the XNA and
Silverlight developer tools and the promise of a substantial user base with the Nokia
deal. Microsoft has also cleverly targeted its Windows Phone platform - not to existing
Windows Mobile developers who are disillusioned with the legacy platform, but to

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previously untapped segments of desktop and games (Xbox) developers, which are new
to mobile.

Google’s Chrome OS ranks highly with the promise to follow Android’s market
penetration with nearly one in four developer stating they plan to use - Google’s
Chrome OS ranks highly with the promise to follow Android’s market penetration with
nearly one in four developer stating they plan to use the platform.

MeeGo and Qt still garner developer optimism. Nokia has left developers with no
guidance as to the future of MeeGo and Qt, and yet developers show more interest in
these two platforms than BlackBerry, on which RIM is spending hundreds of millions in
acquisitions.

As the platform abandonment chart shows, Symbian and Java ME are the two
platforms with the highest developer abandonment rates; nearly 40% of developers
currently using Symbian and 35% of developers currently using Java ME are planning
to drop the platforms.

The Java ME abandonment comes as no “Windows Phone development tools
surprise: neither Oracle nor Sun have spent any are first class - for example both
marketing dollars visibly promoting the Java designers and developers can work
mobile platform. Moreover, what’s been missing collaboratively on the same project.
in Java ME is the direct-to-consumer This level of sophistication isn’t
distribution channel (a.k.a. app store), which available on either iOS or Android.”
Sun did not have the vision or commitment to Andreas Tsouchlaris
introduce. In the case of Symbian, Nokia dealt R&D Manager
an epic public relations blow to its own platform, Binary Logic
announcing on February 11 it would put all its
smartphone eggs in the Microsoft basket.

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The Palm OS and WebOS mindshare decline is also to be expected, given that HP has
managed to convince neither the mainstream media nor developers that it can compete
as a platform vendor in a game where the rules are defined by Apple and Google.

Qualcomm’s BREW is perhaps the biggest surprise amidst platforms being abandoned.
With the latest BREW MP platform, Qualcomm made a platform investment of
hundreds of millions of dollars, including a development team of over three hundred
people. And, it managed a major feat, in closing deals for AT&T and Verizon feature
phone devices. Yet, with BREW remaining an aging development environment,
Qualcomm has not managed to retain developer mindshare and compete in the new
rules of the game, where apps and APIs matter over and above devices and carrier
deals. Already 25% of respondents using BREW are planning to abandon the platform.

Before WAC has managed to ship its first device (see our case study on Smart’s
Netphone), developers are already abandoning the widget-based, operator-backed
platform. This comes as little surprise given the poor track record of operator-driven
software platforms, including SavaJe, the i-mode alliance, LiMo Foundation, and now
WAC. Creating a developer ecosystem requires very different culture and organisational
DNA than what’s needed to build a telecoms network.

Flash is another platform that appears to be losing the battle for mobile developer
mindshare. While overall mindshare for the Flash platform increased in 2011, we
believe this is due to new segments of ActionScript developers and Flash designers who
are starting to develop for mobile. In parallel, Flash runs sixth among platforms
developers plan to abandon. The root cause is nothing else other than Adobe’s own
mobile strategy, who much like Sun failed to materialise the vision of a write-once-run-

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everywhere platform. We argue that the “Flash Lite is in decline and many
failings of Adobe’s strategy can be traced to development houses have closed
three reasons: shop. We ‘re one of the few Flash
Lite companies still running because
a. Reach over consistency. Adobe over-
we have been able to keep ourselves
prioritised reach over consistency in deploying
small.”
its Flash Lite across mobile platforms. Despite
having Flash Lite deployed across more than Stefan Wessels
Co-founder
one billion handsets, the platform ended up Breakdesign
being fragmented, inaccessible to developers
and with an aging platform installed base. As
such Adobe had to scrap Flash Lite and start from scratch with Flash on mobile.

b. Old-school culture. Adobe has traditionally had a US-centric, media-conglomerate
culture, contrary to Macromedia whose Flash Lite platform Adobe acquired. By being
US-centric, Adobe has been unable to realise the opportunities in developing regions
such as Asia. Moreover, by focusing on large business partners, it has been unable to
cultivate momentum among developers in the long-tail. Last but not least, Adobe has
not been playing fair with their developers, for example closing APIs in favour of
exclusive commercial deals around those APIs or shutting down products like Flash
Cast, completely. As a an old-timer Flash Lite developer notes, “you can never rely on
Adobe to put developers ahead of its commercial interests.”

c. Platform complexity. Adobe’ introduced a complex platform (ActionScript 3)
which alienated their designer, non-programmer developer audience who has since
been moving to native platform alternatives like iPhone and Android.

At the other end of the application economy, brands and companies across verticals
have had a slower, less refined approach to platform selection. Apple and, to a certain
extent, Android are the preferred entry point for brands and publishers who want to
extend their digital strategies to mobile with a ‘premium’ experience. Moreover, as
brands and organisations increase their understanding of mobile, so their digital
strategies demand reach into the mass-market. This demand for reach is usually served
through three means: mobile websites (developed internally or outsourced), and in
some cases use of mobile app publishing platforms (e.g. Communology, Conmio,
Mobiletech) or magazine-style publishing platforms like Flipboard, Taptu and Zite.

Users can buy you love
Developer mindshare has indeed shifted greatly within the last of 12 months. But what
are the drivers of platform selection? In other words, what makes developers invest
time and effort in this or that platform? Is it a question of money, features, fun or
reach?

We found that developers have become even more business-savvy in the last year.
Among the top five reasons for selecting a platform, there is just one technical reason
and four commercial ones, as shown in the next graph.

Money can't buy you love, but users can! Large market penetration (the ability to reach
users) was the most crucial factor for platform selection: half of the respondents across

20

all platforms thought that market penetration was the top reason for platform selection.
Meanwhile, the ability to make money was deemed relevant by just a quarter of
respondents. In fact, the ability to make money, on average, is no more important than
the ability to code and prototype quickly.

Interestingly, the scoring of platform criteria doesn’t change significantly across
developers with a technical role, compared to those working in a commercial role
within a development house. The only notable difference was that revenue potential as
a reason for platform selection was, understandably, twice as important for developers
with a commercial role than for hobbyists.

Platform selection criteria do not vary significantly by company size, either. The only
notable insight is that as companies grow, platform selection criteria shift away from
market penetration and into prioritising the platform the client has requested.

However, before platform vendors go out and start adapting their marketing messages
to emphasize user reach, there is some very important small print here: platform
selection criteria differ considerably across developers using different platforms.

For example, platform selection for iOS
developers is heavily skewed towards “Low cost of entry is critical for a
commercial criteria. On the contrary, for new platform. For a small company,
Windows Phone developers the selection is the main considerations in adopting
heavily skewed towards technical criteria, an a new platform are the cost of
indication that Microsoft does not yet have a porting and hitting the max amount
commercially appealing platform. The next of users with a single version.”
chart shows the importance of the top two
Roger Nolan
commercial and top two technical criteria CTO at Ambient Industries,
for platform developers, relative to the producer of the Flook location browser.
average, across the top-eight platforms.

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Preparing for a multi-screen future
It’s no secret the vast majority of mobile developers are targeting smartphones. Most of
the news buzz these days is focused on Android and iOS. But beneath the veneer of
‘smart’ devices, the developer ecosystem is gearing up for the multi-screen future where
smartphones are no longer the ‘cream of the crop’ amongst the digital channels to
consumers.

In our research, almost 50% of respondents who develop for smartphones also develop
for mid-range (messaging and Internet capable) phones. Moreover, we saw a four-fold
increase in the number of developers planning to develop apps for TV or set-top boxes,
indicating that the market for living room apps is developing momentum. Nearly a
quarter of Android, iOS, Java, mobile web and Qt respondents are planning to target
TV and set-top boxes in the future.

It is widely accepted that mobile web is the “Programming and UI metaphors
prevalent choice for multi-screen app are very different on all platforms
development. Our research confirmed that (iOS, Android, WP7).. in practice the
mobile web is also the most versatile code reuse is minimal between the
platform. Mobile web developers currently platforms. We ‘re actively looking at
target on average 2.5 different screen types, HTML5 for multi-platform
ahead of Android and Qt developers, each of development.”
whom targets 1.8 screen types on average.
Mobile software developer,
working for a leading UK news publisher
Besides the mobile web, there is no other
mainstream platform today designed for

22

cross-screen development. “Programming and UI metaphors are very different on all
platforms (iOS, Android, WP7).. in practice the code reuse is minimal between the
platforms. We ‘re actively looking at HTML5 for multi-platform development.” notes a
mobile software developer working for a leading news publisher in the UK.

Java, the king of cross-platform apps, has lost its allure. Java developers come third in
planning to target multiple screens. Moreover, Java developers show a very strong
intent in transitioning from mid-range to smartphones, away from the stronghold of
the Java platform.

The next graph shows the developers currently targeting different screen types.
Currently iOS developers show strongest preference for targeting smartphones,
whereas Java developers show strongest preference for targeting mid-range phones.
But future intent is very different; iOS and Blackberry developers show least interest in
a multi-screen future, whereas Qt and Android developers show most interest towards
coding for multiple screens.

Mobile developers: one size doesn’t fit all
We know by now that not all developers wear a ponytail, khaki shorts or propeller
beanies. Such misconceptions date from the days when software engineers were
perceived as unsociable geeks sitting in a back room, and never talking to their
customers.

Most network operators, handset OEMs or consumer brands often use the word
“developer” to attach a label to anyone developing mobile applications, whether a
hobbyist or a programmer within a Fortune-500 company. However, in today’s world,
where developers are the foremost mobile innovators, we need to become more savvy in
understanding who exactly these “developers” are.

There are many ways to segment “developers”: by geographical region, platform used,
level of experience, criteria for platform selection, by the category of applications they
are developing or by industry verticals they are catering to. Developer segmentation is
as sophisticated as consumer segmentation. But in whatever metric or measure is used,

23

one needs to acknowledge that there are several types of “developers” out there, from
hobbyists and students, to startups, self-financed professionals, commissioned
developers, digital agencies, system integrators, as well as developers working within
established businesses developing B2B or B2C apps – all having different incentives,
aspirations, priorities, needs and wants.

We next look at some of the ways developers differ based on app categories, level of
experience and geographical location.

Application categories matter
Developers focus on different app categories based on their primary platform. We
found that business apps are particularly popular among Windows Phone developers,
but equally unpopular among Android developers. Entertainment apps are popular
among iOS and Qt developers. Games are popular among Qt and Java developers, but
rare among mobile web and Windows Phone developers.

This implies that platform vendors need to cover their soft spots, in terms of app
categories that developers are less active in. Operators, meanwhile, need to tap into the
right developers to address their service portfolio. Finally, for developers, genre gaps on
specific platforms may provide opportunities to stand out.

Experience matters
Every self-respecting software platform today needs to have a fast learning curve (more
on that in Chapter 3). At the same time, there’s no substitute for experience – and the
distribution of development experience is anything but balanced across the developer
ecosystem. We see platform vendors lacking sophistication in their targeting of the
developer ecosystem as we discuss next.

With the shift away from Symbian, Nokia is bleeding high-calibre mobile developers.
Symbian developers are on average the most experienced in mobile software, with these
developers being 15% more likely to have seven-plus years of mobile experience.

We can also quantify the signs of Apple’s allure towards experienced PC and Internet
developers, since the iOS platform attracts significantly more developers with seven-
plus years PC/Internet experience, compared to other platforms. This confirms that
experienced software developers are moving into mobile, using iOS as an entry
platform, in what we believe is driven by the sudden rise in demand for developer
talent, especially in North America.

Since launching in late 2010, Windows Phone 7 has done pretty well in attracting
seasoned developers. We see experienced mobile developers coming to Windows
Phone, with a significant bias of current Windows Phone developers having between
three and six years of mobile experience - an indication that Microsoft’s strategy to tap
into PC and Xbox developer segments is paying off.

24

In conclusion, developers who are “Entry to Android is very very easy.
experienced with PC/Internet software There will be a stampede of developers
development are jumping into mobile. on Android.”
However, our research shows that aside
Kishore Karanala
from Apple and Microsoft, platform
Experienced Symbian developer
vendors are not attracting enough Teleca India
developers with experience in mobile or
PC/Internet development.

The developer-market mismatch
We firmly believe software innovation will not just be global; like news and music, we
believe that mobile apps will follow a regional route. That is, most popular mobile apps
will be local (or locally adapted) apps. As such, it is important for platform vendors and
OEMs to cultivate and capture local developer talent and mindshare. Yet, we are seeing
many regional gaps across the mobile developer ecosystem where developer supply
doesn’t match market demand, especially on BlackBerry, Java and Flash Lite platforms.

BlackBerry developers are naturally concentrated in North America, with 16% more
respondents from that region; but in addition, they are almost completely lacking in
Europe. This reveals a major gap in RIM’s developer marketing efforts.

The traditional sweet spot for Java developers has moved out of Europe to emerging
markets: Asia, Africa and South America, with 42% more respondents from these
regions. This is due to low penetration of iOS and Android in Asia, Africa, and South
America, and also to Java having suffered from negative hype in the traditional
development hubs of Europe and North America.

Flash Lite is another platform that exhibits a huge gap between markets (demand) and
developers (supply). The sweet spot for Flash Lite is in emerging markets where the
platform delivers best-in-class experiences on mass-market Nokia Series 40 handsets -
and not on the iPhone or Android platform where Flash can’t compete with native apps
in terms of user experience. Yet there are very few Flash developers targeting such
emerging markets. “We are one of very few developers for Nokia handsets in the South
East Asia region. The Flash Lite theme market for low-end phones is a blue ocean,”
notes Stefan Wessels, co-founder of Breakdesign, a company with more than 7 million
app downloads.

Android is the one and only platform that is tri-laterally adopted by developers across
all three major continents active in application development: Europe, North America
and Asia. “Entry to Android is very very easy. There will be a stampede of developers on
Android” notes Kishore Karanala, a seasoned Symbian developer with 5+ years of
mobile app experience working for Teleca India. In contrast, iOS is lagging in developer
mindshare in Asia, due to the relatively low penetration of Apple devices in Asian
countries.

25

26

WHERE IS THE MONEY?

2. Taking Applications to Market

The developer journey
The life of a mobile developer is a complex one. It’s not just a two-step, idea-to-app
process. In today’s global application market, there are tens of steps in taking an idea to
market – including planning, developing, debugging, support forums, test frameworks,
packaging, pricing, publishing, billing, marketing, sales tracking, user support and
application updates, to name just a few.

To illustrate the intricacies of app development, we’ve put together the Developer
Journey, a chart showing the tens of touch points in the life of a mobile developer. The
Developer Journey is an important tool, not just for appreciating the complexity of
mobile development, but also for helping platform vendors map the competitive
landscape of supply and demand, and understand how to differentiate.

The Developer Journey consists of the following six stages. Note that the Developer
Journey presents a comprehensive model covering every possible touch point – which
implies that most developers will selectively touch on some of the stages below, but not
all.

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1. Application planning is the stage where a developer takes a concept through the
initial stages of feature design, prototyping, selecting the right platform, and designing
for the right users.

2. Develop & debug, is where the hard work takes place: coding the application,
designing the UI, testing and porting. This stage is where the vast majority of developer
programs are focused today.

3. Market readiness, an often under-hyped part of the developer journey where the
application is readied for publishing to the market – including localisation, packaging,
variant management, certification and submission.

4. Distribution & monetisation is the stage addressed by app stores. It involves
publishing the application, establishing billing and distribution agreements and making
money from application sales, ads or other monetisation means.

5. Retailing & discovery is the stage where an application needs to be promoted
through as many channels as possible, so as to grab user attention. Retailing is the stage
facing the most challenges today, due to the over-supply of applications and the
bottleneck of discovery.

6. In-life use is the final stage, in which developers need to track sales and usage
analytics, support users and manage ratings, as well as update the application with bug
fixes and features.

Chapter 1 in this report has looked at the application planning stage. Chapter 3 will look
at the develop & debug stage. The rest of this chapter will examine the last four stages
of the developer journey, i.e., the challenges and opportunities in taking applications to
market.

The application store duopoly
In 2011, app stores are a fact of life and they are here to stay. Our research found that
use of app stores as a primary distribution channel has surged by over 30% compared
to 2010. Today, app stores are the primary go-to-market channel for 45% of mobile app
developers across the eight major platforms.

App stores have irreversibly changed the landscape of mobile application distribution
today. In the last year, use of other application distribution channels has consistently
declined across the board; most notable are the year-on-year 20-30% declines in app
distribution via third party aggregators, on-device preloads, and via developers’
website.

Operator portals, whose ‘walled gardens’ once dominated content distribution, are
paling in significance compared to app stores. “Downloads through operator portals are
still less than one million per month on average per operator,” notes an executive at one
mobile app development house and continues, “Compare that to one billion per-month
downloads from the Apple App Store”.

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It’s no wonder operator portals have lost their shine. Telcos have typically outsourced
their portal operations and development to major IT suppliers who have lacked the
culture and incentives to evolve with the times. “The same people who failed in WAP
portals are doing operator app stores now,” points out the CEO of a leading mobile app
agency in Germany. Moreover, the discovery and purchase process through an operator
portal has major drawbacks to modern app stores. “It’s more complex to download a
game through an operator portal than to open a
bank account,” notes Christopher Kassulke, CEO
“What T-Mobile does in one
at Handygames, a major app development house.
year in terms of downloads,
And still, in 2011 – in the era dominated by app
we do in one week.”
stores and long-tail innovation – there are tier-one
telcos who require developers to sign 20-page Manager
Top-ten games developer
contracts before they can discuss a deal.

Use of each channel to market also varies significantly per platform. App stores are
used primarily by iOS (77%) and Android (54%) developers. In contrast, mobile web
and Java ME developers distribute apps primarily through their own websites and
portals, due to the lack of app stores with sufficient reach and discoverability.

Reach is by far the most important reason behind developers’ preference for app stores
as a distribution channel. More than 50% of developers distributing through Apple,
Google, Nokia or BlackBerry app stores cite the ability to sell to more users as the
primary reason for app store selection.

Exclusivity is not a critical reason for app store selection, either; only one in five
Android and Blackberry developers choose an app store because it was the only
distribution channel available. Moreover, neither the revenue share split nor the speed
of payment are cited as important reasons for distributing via an app store. Support for
marketing and promotions is the third most important reason for using app stores as a
distribution medium; we expect marketing support to increase in importance as app
stores develop more sophisticated targeting and promotional programs.

29

All in all, app stores dominate over every other distribution channel because of reach,
not exclusivity or payment terms.

App stores are relatively quick to pay, too. Just over 60% of respondents using app
stores get paid within one month from submission. The only distribution channel that’s
faster to pay is when developers are using their own website, where 75% of respondents
get paid within a month of the purchase.

Drilling down into the ins and outs of the four main app stores, our research reveals
significant differences across Android Market, Apple App Store, BlackBerry App World
and the Nokia Ovi Store – as the next chart reveals.

Apple’s App Store has a notoriously unpredictable quality control and curation process
during app submission, which causes some dissatisfaction across developers. The
mainstream press is peppered with stories of apps whose approval was inexplicably
delayed or even rejected when the apps conflicted with Apple’s own agenda.

Android, on the other hand, places priority on developers with an automatic
submission process with no QA or curation, resulting of course in an increase in ‘noise’
from low-quality and even copyright-infringing or malicious applications in the
Android Market. “The problem with Android Market is that you cannot tell if an
application is an official app or a look-alike” notes an application developer who’s been
developing on Symbian and Bada platforms. “Something needs to change in Android
Market to get the quality of apps up to the same level as the Apple App Store” says
Roger Nolan, CTO at Ambient Industries, producer of the Flook location browser.

The application quality review process is straightforward in the case of Android, but not
so for Nokia’s Ovi Store. Developers that we spoke to report that the Ovi Store
submission process is cumbersome and unnecessarily restrictive. Due to tough
approval criteria, an application typically takes five or more review cycles before it can

30

appear on the shelf. Given that the turnaround time for each review cycle is 7-10 days
(compared to just 24 hours for the GetJar store), that means that the time-to-market
for Ovi Store apps is often 1.5-2 months. Moreover, Ovi Store content needs to be
approved on a country-by-country basis. To make things worse, the review cycle isn’t
streamlined, which means that each cycle is handled by a different reviewer within
Nokia. Another important issue is that the root certificates have not been installed on
some S40 handsets (esp. in India), which means that even if an application is approved,
it can’t install on the handset. “The only reason we persevere with Ovi is that once we
get the app approved, the downloads are quite substantial” notes an application
developer who uses a multi-channel distribution strategy.

Ovi is not alone in being criticised for its problematic “Typically it takes 1-2 days to have
application submission process. “It’s difficult to get a an app published on GetJar and 2-
sign-off for Bada apps. Every week we have a new 4 weeks on the Nokia Ovi Store.”
problem with the Samsung App Store, including
poor documentation, language barriers and Mark Shoebridge
Binu
unreasonable control from Samsung, even on Sydney, Australia
application design issues” notes a developer in the
UK who has already published four Bada apps.

The fragmented app store landscape
Besides the four main native app stores – Android Market, Apple App Store, BlackBerry
App World, and Nokia Ovi Store – there are hundreds of distribution channels to
market. There are over fifty different app stores, and many more if one includes the
many operator portals globally. Furthermore, the selection of app stores available
varies by region, operator or manufacturer deals.

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App store fragmentation is an under-hyped “Eventually apps will evolve to a
challenge for developers. Each of these fifty-plus consolidation of submission and
app stores has its own developer sign-up process, payment mechanisms but a
app submission process, artwork and paperwork multitude of discovery options. In
requirements, app certification and approval the world of scarcity you can win a
criteria, revenue model options, payment terms, lottery ticket. In the world of
taxation and settlement terms. This implies that abundance, the competition is for
the marginal cost of distributing an application attention.”
through one more app store is significant, contrary
Jai Jaisimha
to popular perception.
CEO
Open Mobile Solutions
Therefore, while the native app store is used by
40-80% of developers (depending on the
platform), there is a significant opportunity – and associated cost – in using a multi-
channel strategy in app distribution.

In platforms like Android, where tens of app stores compete for user attention, the
picture is quite complicated. Unfortunately, the vast majority of developers do not have
the resources to distribute their apps through more than one or two app stores. At the
other end of the spectrum, only a dozen or so software houses can deliver apps to the
majority of app stores, with that number typically ranging to 70+ app stores.

We believe that the app economy needs a single entry point for application submission
(one per platform), along with a million distribution channels:

- one app submission process, i.e., a single website, single contract, single approval
process, single billing & settlement and a single mix of business models per platform

- a million distribution channels, i.e., a million different channels through which to
retail and sell apps to consumers with a variety of prices, promos, bundles, and regional
access that help developers more effectively market their applications.

An early role model for this single-in, many-out distribution model is perhaps Amazon.
Amazon’s app store addresses many of the challenges of Android Market, including
quality control and curation, relevance and recommendations, as well as device
compatibility, showing only those apps that are compatible with each handset model.
Amazon further leverages its retailing expertise and consumer insights to set the price
for each application, between 70% of the sale price and 20% of the list price.

More importantly, Amazon offers a wealth of cross-selling opportunities for
applications, by listing an application next to relevant digital or physical goods, based
on the click-stream of each user and their preferences. Amazon is playing the
“doorkeeper” role that operators used to play in the past, but more importantly, is
allowing developers to reach out to more users through cross-selling and
recommendations mechanisms.

We believe that app store fragmentation offers two opportunities. First, for app store
brokers with a develop-once-publish-many model, who can take an application and
publish it across multiple app stores. Second, for app stores that offer sophisticated
marketing and promotional channels that can optimise app pricing based on the user,
region or bundle the app appears with.

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Getting ready for launch
Planning and testing comes before publishing an app. The vast majority – around 90%
of developers – use some form of planning or testing technique before publishing their
apps, whether it is peer reviewing, beta testing or market research. In fact, developers
use two planning techniques on average, irrespective of their primary platform,
pointing to how planning is seen as essential for developers to compete within the
crowded applications marketplace.

By far the most popular planning and testing techniques before app launch are peer
reviewing with friends or colleagues and beta testing with customers. Both these
techniques are used on average by about 50% of developers. Use of market research has
significantly increased in the last year, and is most popular among developers who use
app stores as their primary channel to market.

Despite the importance of app planning, most developers still use rather
unsophisticated techniques, like peer reviewing, for establishing whether an application
is ready for launch. And it’s not a question of price; beyond the use of elaborate, costly
techniques, like running focus groups or using scenarios and personas, there are more
accessible planning alternatives that exist today that can help in the stages leading to
the launch of the app. For example, application analytics (e.g. Distimo, PositionApp)
can reveal important competitor intelligence about apps in the same region or genre,
while crowd-sourced beta testing (e.g. Mob4Hire, uTest) can offer crucial, unbiased
feedback to developers before app launch.

The unpopularity of sophisticated planning techniques is due to a lack of awareness
marketing and, in some cases, affordable pricing on the part of tools vendors. Some
poor planning also results from the ‘not invented here’ syndrome, a not uncommon

33

phenomenon in which software developers “On Android and iPhone your app is
assume ultimate knowledge of their target going to be buried almost instantly.
customer. Regardless, app developers’ lack of But if you can go from 1,000 to
planning presents a ‘blue ocean’ opportunity 10,000 to 50,000 downloads very
for platform vendors and OEMs to quickly you get picked-up by the app
differentiate their developer programs by store algorithm - which means you
offering subsidised access to app store immediately get calls from Nokia
analytics and crowd-sourced beta testing. and Samsung who want you on their
platforms.”
In the case of branded apps, marketing Cross-platform app developer, UK
managers in industry verticals are used to very
sophisticated marketing techniques, spending
millions to better understand their customers. Getting to know the behaviour,
preferences and expectations of mobile users is becoming imperative in the case of
mobile apps, too. To improve targeting, brands are routinely measuring downloads,
frequency of use, patterns of feature use and time/day of use.

Post app launch blues
The biggest challenges for developers, post-app launch, are customer support, updating
apps in the field and developing incremental features, as voted by over 40% of
respondents. Managing negative user ratings is another important challenge,
particularly for developers who distribute via Apple, Google or Nokia app stores.

App promotion is another thorny issue for developers publishing their own
applications. Developers are clearly discontent with the lack of promotion options
across most app stores; there are very few off-the-shelf tools available to help
developers promote their apps. Four out of five developers do promote their apps, with

34

the primary techniques being social networks (Facebook, Twitter, etc), followed by free
app demos, and – particularly amongst developers using app stores – blogs and forum
postings. Only one in 10 developers promote their apps using ad networks, with web
keyword search being the most popular, followed by mobile keyword search and mobile
ads. “Printed ads and web ads do not work well for apps. The user has to be one click
away from downloading the app” notes Olivier Milcent, Chief Marketing Officer for
Momac, a mobile app platform house.

Despite the challenges in application promotion, best practices are starting to emerge in
up-selling and cross-selling. A major games house sees a 20% conversion rate from free
to paid with an ad-supported, “full freemium” model. In other words, one in five users
who try a fully functional, ad-supported game, go on to buy the paid, ad-free version of
that game, or buy another game that is advertised. In contrast, ‘light’ or ‘demo’ versions
with limited features or levels result in lower conversion rates.

Given the long tail of hundreds of thousands of application developers, what the app
economy lacks is an out-of-the-box “SDK” for app marketing. Such a toolkit would
allow developers to invest in targeting the right users and increasing exposure. This
lack has prompted tens of startups to offer recommendation and promotion tools that
help connect the right app to the right user; examples include Appaware, Appboy,
Appolicious, Apprupt, Appsfire, FrenzApp, Flurry, Explorapp and Chorus. However,
such tools are still a long way from becoming mainstream, with promotional platforms
like Flurry’s App Circle being used by less than 4% of our respondents.

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Show me the money
Money matters. But in the gold rush to the applications economy, not everyone is
making money. About a third of respondents make less than $1,000 USD per
application in total, which is loss-making given that an application takes months to
develop.

Moreover, not all platforms are born with equal revenue potential. Our research
revealed large discrepancies across platforms in terms of the revenues applications are
bringing to developers.

We compared per-application revenues reported by developers for different platforms.
Symbian scored lowest, so we assigned a base value of 1.0 to its reported per-app, then
rated other platforms relative to this “revenue index”.

iOS topped the chart, making 3.3 times more money per app than Symbian developers
followed by Java ME (2.7x) and BlackBerry (2.4x). Java should come as no surprise
here, given it is still the primary platform for developing games on feature phones
which often have higher price points than smartphone apps. Android (1.7x), mobile web
(1.6x) were the weakest performing platforms in terms of revenue per app and only
ahead of Symbian (1.0). The important insight here is that large device sales do not
translate into higher app monetisation for developers, as the case for Symbian shows.
Note that we excluded developers making more than $100K per app, and those who did
not know or could not indicate revenues.

36

The amount of revenue generated from an application on average is not just about
market reach. It’s a complex orchestration of techniques across the entire go-to-market
lifecycle of an application, including usability guidelines, quality control, application
discovery, and billing options. Even small details like the mix of revenue models make a
difference. For example, the Apple App Store does not allow trial versions of
applications, which motivates users to buy before they try, which indirectly increases
developer revenues. As a counter example, Windows Marketplace offers a trial version
for applications, which doesn’t help developers monetise from impulse purchases – a
naive differentiation move on the part of Microsoft.

There are more complexities around monetisation. For example, while Java ME offers

37

relatively high revenues per app, Java ME developers did not necessarily respond
positively when we asked about their level of satisfaction with revenues (i.e. whether
revenues were above or below expectations).

The previous graph is quite telling. The good news? One in three developers see the
level of revenues they expected. The bad news? On average, there are five times more
developers who are dissatisfied with their mobile application revenues than there are
satisfied developers. The platforms do add some colour to the picture; iOS developers
have more positive impressions than any other platform, whereas Java ME has the
most developers dissatisfied with revenues, since feature phone Java games downloads
are in decline.

Besides the revenues individual developers are seeing, how are revenues distributed
across app categories? Games dominate all other application categories bringing in a
total of 45% of revenues from paid downloads and in-app purchases in the Apple iOS
App Store in April 2011, according to analytics firm App Annie. The revenue breakdown
by category is based on a bottom-up statistical model drawn upon more than 40,000
apps, which use the App Annie sales analytics service.

How do developers make money?
Much like the web, the application economy is steadily shifting to corporate funding;
more and more developers are working for a salary or commission. Approximately 50%
of app developers in our survey make money through a salary or commission,
confirming that commissioned app development is becoming as an important part of
the app economy as making money directly through applications.

For developers making money directly, the top revenue model is pay-per-download,
followed by advertising and freemium (free download, then pay to upgrade). Despite
the hype surrounding newer revenue models, we found that subscriptions and in-app

38

purchases are three times less popular than the pay-per-download model, across all
major platforms.

The distribution of revenue models varies widely by platform. Among mobile web
developers, advertising was the most popular model, with many Android developers
also using this model. Pay-per-download was most popular among iOS developers.

App stores have radically enabled new revenue models. For example, use of pay-per-
download is three times higher for developers using an app store, as opposed to
developers who primarily distribute apps through their own website. Use of advertising
and in-app purchase is almost double for apps distributed via an app store.

Finally, a small percentage of developers (on average one in 10, irrespective of
platform), make money through brand extensions or service revenues. This revenue
model appears to be more popular than average amongst mobile web developers.

When it comes to brands and commercial organisations, generating direct revenues
from a mobile app is not often the top priority. Most brands introduce apps as a way to
increase accessibility and interaction with their target market. However, organisations
becoming savvier in extending their digital strategies into mobile, are seeking to
generate revenue as well. Our research highlighted three main mobile revenue streams
that brands are looking into: advertising, one-off or subscription-based app sales (if the

39

application adds genuine value, e.g. as a game, utility, business, travel, fitness, or other
app) and in-app purchases, especially in games, social networking, travel and sports
apps.

The role of mobile operators
In the last few years, mobile network operators (‘carriers’ if you live in North America)
have been unwillingly dragged into the software era – one dominated by economies of
demand that Apple and Google live by, not economies of production that operators
have been accustomed to.

As the innovation in mobile has shifted to software, so network operators have been
keen to re-establish themselves and take part in software-led innovation. As such, the
leading operators in Western, smartphone-populated markets – including Telefonica,
Vodafone, Orange, Telenor, AT&T and Verizon – have launched developer innovation
programs and network API platforms. Many have also launched their own app stores.
The Wholesale Applications Community (WAC) is essentially an operator-centric
initiative to help operators compete against Apple and Google, who dominate the
smartphone innovation and value chain. The WAC aims to help operators develop a
solution that encompasses an application runtime, app stores and APIs.

Traditionally, application developers have been cold and uncertain as to the role the
operators can play in a software world. While the majority of developers agree that the
role of operators is to delivery data access and voice, there is no consensus on the role
of operators in software. For example, developers don’t agree on whether operators
should be a payment gateway, an API platform, build the best mobile services, or just

40

leave developers alone.

However, marketing efforts on behalf of operators have been paying off. There is now
much more awareness amongst developers that the role of operators should be to offer
a platform of network APIs.

We are also now seeing important regional differences in how developers perceive
operators. For example in Asia, many more developers (14% above the global average)
see operators as a payment gateway or API platform, and not just a data or voice pipe.
In Europe and North America, developers are showing signs of discontent with
operator-owned services, with many more developers (20% above the global average)
suggesting that the role of operators is to deliver data and voice, and not to own services
or to offer a supermarket-like proposition.

Yet, operators still have a lot of ground to cover in capturing developer mindshare.

Business model polarity
A fundamental change that we believe operators need to undergo is to see developers
not as resellers of network APIs, but as benefactors or agents driving end users to the
network’s core business. Operators need to greet developers not with price-lists, which
are commonplace among network API programs, but with partner programs in which
developers get to share in the revenue generated when they drive users to the network.
They should let developers focus on finding new ways to innovate with apps that use
telco capacities, instead of worrying about whether their cash flow is adequate.

In other words, operators need to change their business model from a “developer pays”
model to a “developer gets paid” model. If developers create apps that use telco APIs,
they drive traffic or usage, which benefits both the user and the telco. It’s not the
developer that needs to pay – it’s the user. What needs to happen is a change in what
we call “business model polarity”.

Consider this scenario in the traditional developer-pays world: A developer builds an
SMS-to-Twitter service; the user sends a new tweet as a text to a short code. The reply,
an SMS back to the user, is then paid by the developer. The developer is penalised for
generating traffic to the network. This is the “developer pays” model and it doesn’t
work.

In the “developer gets paid” model, a single API allows the user to pay for both outgoing
and return SMSs in one shot, and the developer gets to use the API for free and even get
a revenue share kick-back in return. The developer can focus on building a viral service,
and won’t have to worry about success costs.

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This is a fundamental polarity change. Instead of the developer paying for access to
network resources, the developer gets paid for driving increased voice or messaging
revenues.

Matchmaking developers to users
Besides tools or APIs, operators have an even more important role to play, by
connecting developers to users. We believe operators are sitting on a pile of gold: a pile
of untapped intelligence on who their customers are, their interests, where they are
going, and who are they influencing and being influenced by.

Before we conjure any images of Big Brother here, let’s view this customer intelligence
in a different light. Namely, as helping users find the right applications. We
fundamentally believe that operators can leverage the mountain of customer
intelligence to support developers in solving the discovery problem - which still plagues
the app economy - by helping users find apps relevant to their location, social circle,
and buying habits. In other words, operators can become the best matchmakers
between developers and users, between the right app and the right user.

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43

HOW DO PLATFORM CHARACTERISTICS STACK UP ?

3. The building blocks of mobile apps

Getting to grips with mobile
Not all platforms are designed equal – and getting to grips with mobile development
can be a major investment of time and effort, depending on which platform you choose
to learn.

Android and Qt are by far the easiest platforms to learn, with respondents requiring an
average of under six months to master. In contrast, Java ME and Symbian are the
hardest platforms to get to grips with, taking over 10 months to master.

Contrary to popular perception, mobile web isn’t such an easy platform to learn,
ranking sixth in terms of learning curve. This is not due to the complexity of any one
language like HTML or JavaScript, but due to the need for web developers to learn a
complex stack of languages and technology frameworks across client and server
environments, in addition to having to battle with the challenges of cross-browser
portability.

The next chart illustrates the relative learning curve per platform, and how not all
platforms are born equal.

44

Measuring fragmentation
“Commercial and UX considerations
Fragmentation is as old as software itself. aside, 97% of the application code
Fragmentation challenges have been a key topic of across iPhone and iPad is usually
discussion in mobile industry circles since Java the same.”
ME started proliferating in 2004-5. No matter the
Alex Curylo
platform advances, fragmentation remains an Winner of "Most Innovative Product",
unsolved problem – both for developers targeting Apple Design Awards
multiple platforms, but also for the likes of Apple,
Google and Microsoft, for whom fragmentation
can break the ‘platform story’.

Moreover, fragmentation is a challenge for brands and commercial organisations going
mobile, as it adds a completely new dimension of complexity. For brands, extending
presence to the web is a straightforward process involving developing a website and
testing it across the two or three mainstream browsers found on 80% of devices. Going
mobile complicates things much further, as developing across the top three or four
mobile platforms (iOS, Android, Symbian and BlackBerry) reaches just over 20% of the
devices sold on average, and represents a much more resource-intensive operation as
there is very little code reuse across these platforms. Extending user reach beyond this
20% presents formidable challenges which can only be addressed only with a lowest
common denominator approach.

To quantify platform fragmentation we asked developers how many versions (also
referred to as SKUs - stock-keeping units) of their apps they need to develop.

45

We were able to quantify that indeed Apple’s iOS
is the platform with the least fragmentation (on “Anyone who states Android is
average four versions per app), as has been fragmented must have no
widely noted from empirical evidence in the experience developing on
past. Apple manages fragmentation through two BlackBerry or Nokia platforms. Even
primary means: first, it has standardised the iOS has a six different devices of
screen size and resolution for its handsets and varied capability now.”
tablets; and second, as an OEM and platform
Brian LeRoux
vendor, it has commercially streamlined the Nitobi Software
means by which most iPhone or iPad users are
upgraded to the latest OS version.

In contrast, our research indicates that Android developers must create six versions of
their apps on average, which is on par with mobile web apps.

The stark difference in fragmentation across Apple and Android devices is also evident
amongst the different platform versions in the installed base of devices. According to
Google data released on May 2011, 25% of active Android handsets run on platform
versions more than 18 months out of date. Meanwhile, according to app analytics firm
Localytics, only 20% of existing Apple 3GS devices had not yet been upgraded, just two
months after the introduction of iOS4. In other words, Apple devices have the youngest
runtime age in the mobile industry.

The intensity of Android fragmentation has been widely discussed, and is often cited as
the biggest sore point for the platform. We analyse Android fragmentation into five
dimensions:

1. Release speed: Android’s unprecedented speed of innovation (three major versions
released between Q2 2010 and Q2 2011) means the core platform itself is changing too
often for developers to keep up.

2. Complex incentives: Unlike Apple, Google doesn’t make its own hardware –
meaning Android phone OEMs lack commercial incentive to keep updating handsets
that have already been sold. Instead, they have an incentive to push users to shorten
their device replacement cycles. The commercial update process is especially entangled
when handsets have been produced for a particular mobile operator. Note that Google
recently unveiled a compliance program that will force handset manufacturers to
update their platform for the first 18 months since handset launch.

3. OEM fragmentation: Many handset OEMs differentiate by customising Android
with user interface changes, and their own applications and features. For example,
HTC’s Sense UI differs from Sony Ericsson’s Rachel, Motorola’s MotoBLUR, Samsung’s
TouchWiz and LG’s S-Class user interface. All OEM additions – whether UI layers,
features or even bug fixes –create traces of fragmentation for developers.

4. Screen fragmentation: As Android is being used for multiple screen resolutions
and form factors, from smartphones and feature phones to DECT handsets, set-top
boxes and cars, there will inevitably be the need to adopt an application for different
screen sizes – not to mention adapting the Android codebase to run on a different type
of ‘screen’ than Google designed it for. For example, the Android Honeycomb platform

46

for tablets and TVs is very different than the Android Gingerbread platform for
smartphones, in addition to differences across tablet screen sizes.

5. Codebase forking. China Mobile’s Ophone and China Unicom’s Wophone are
‘forked’ (branched) versions of Android for the China market. Other forks include
Cyanogen and MiuiAndroid, which are unofficial, customised versions of Android
targeted at tech enthusiasts.

Our research confirmed that, contrary to popular perception, Android is still relatively
unfragmented. Rather, it is Java and Symbian that are amongst the most problematic
platforms in terms of fragmentation, with developers needing to create on average
about twice the number of app versions for these platforms, compared to Android.
Moreover, BlackBerry – alongside Java ME – is one of the platforms with the greatest
amount of fragmentation. This should come as no surprise, given the diversity across
BlackBerry device capabilities, input mechanisms and screen resolutions. As of March
2011, close to 40% of installed base of BlackBerry devices run versions of the OS that
are older than version 5. Note that only devices running version 5 and above are
capable to support the BlackBerry App World application store.

On the flipside of fragmentation challenges is opportunity. A number of companies
have emerged to offer porting tools aimed at bridging the gap across platforms. These
companies include Appcelerator, Ansca, Didmo, DragonRAD, iFactr, Innaworks,
Metismo, Mobile Distillery, MonoTouch, MoSync, Open-Plug, Recursion software,
Rhomobile, RunRev, Sencha, StackMob and TapLynx.

Source: VisionMobile Mobile Industry Atlas, www.visionmobile.com/maps

Going global: Localisation issues
With close to one billion apps available, and over 800 million smartphones shipped to
date, apps are a global phenomenon. But, in going global, many developers are having
to deal with localisation, i.e. translating their application to local languages.

Localisation is not yet a mainstream issue: nearly 70% of our respondents either have
not tried localizing their apps or have never had any issues with it. But localisation will
soon become a fundamental issue for mobile developers, as it becomes easier to
distribute apps globally and to develop regionally-sensitive apps and content like news,

47

music and social networks. Currently, developers who are accustomed to creating apps
for global distribution – for example, those working on the Java ME platform – in their
majority are reporting localisation issues.

Overall, the biggest challenge, as reported by one in three developers who address
multiple regions, is that localisation is a completely manual process. The other two
major challenges reported are the cost of localisation and the complexity of managing
language packs. Yet, neither platform vendors nor OEMs have developed frameworks
that allow developers to easily adapt their applications to different languages. We
should note that there are frameworks that facilitate crowd-sourced translation of
software and can be used to localise mobile applications as well – for example
Transifex. This presents an opportunity for mobile platform vendors who want to
differentiate with developers targeting regional markets outside North America.

What’s still not certain is the shape that the app localisation market will take. There are
two prevailing scenarios:

- Superficial: in this scenario, app localisation will resemble the movie business where
only the subtitles are localised.

- Pervasive: in this scenario, localisation will result in pervasive changes across the
application, adapting to region-specific traditions, culture, holidays, and currencies, for
example adapting a shoot-’em-up game to sport a Kalashnikov in Russian markets and
a T3 in Germany.

For now, the future is headed towards pervasive localisation. Already, startups have
sprung up that specialise in localising social games features – from virtual goods to the
entire game – to local markets. These startups include Mentez, which specialises in
localisation for Latin America regions, 6waves, for Asian audiences, and 101XP, for the
Eastern European market.

Help: support needed
Support is an integral part of the development process of a mobile application –
whether it involves looking up code samples, getting devices to test the application or
accessing undocumented APIs within the platform. The question is: which types of
support activities are developers willing to pay for?

Developer preferences for marketing and tech support in this year’s Developer
Economics research were very mixed. Approximately one in four developers would be
willing to pay for premium app store placement. Access to device prototypes was
equally important, as was access to hidden APIs. Another important finding was the
decline of interest in operator portals; developers would be twice as willing to pay for
preloading on OEM devices, compared to being listed on operator portals.

Connecting to the cloud: maps, social and search
Cloud connectivity is not just a fad for mobile developers; it’s also where a lot of the
innovation is taking place. Connecting your app to Facebook’s or Twitter’s
authentication system, retrieving local points of interest via Google Maps, sharing
pictures through Flickr, storing documents on Amazon S3, integrating with Microsoft

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Bing or charging a transaction via Paypal are features that allow app developers to
leverage the best of breed into their own applications. There’s no shortage of long-tail
cloud APIs, either, with Programmable Web listing over 3,000 APIs, including music
(Last.fm), telephony (Twilio), messaging (411sync), advertising (AdSense), shopping
(eBay) and enterprise (Salesforce.com). Moreover, social cloud APIs can help
developers reach new users, as content can be more easily shared within an established
social network with many millions of users.

We asked developers which cloud APIs they are using, and which they plan on using.
We found that iOS, Android and mobile web developers are the most active users of
cloud APIs, while BlackBerry and Java developers were late adopters of the ‘cloud’.

Map APIs are the most common cloud APIs currently used by developers, as testified by
over 40% of our respondents, followed by social networking and search APIs. The most
active users – iOS developers – use map and social networking APIs in their majority
(55% of respondents).

Besides continuing use of maps, social and search functionality, the most important
cloud APIs developers are planning to use are billing (one in three respondents),
followed by carrier billing and advert management APIs. Multi-player game APIs are
also favoured, with one in five respondents planning to use them in the future.

An opportunity that’s currently unaddressed by cloud APIs is a cross-application user
profile management API. “Currently apps are too much standalone, they do not talk to
each other, and so there is a lack of cross-app experience for the user” notes Olivier
Milcent, Chief Marketing Officer for Momac. While social networking sites (e.g.
Facebook, Twitter) are providing user authentication and access to user messages or
contacts, they are mostly designed as read-only, not read-write. Gaming networks
OpenFeint and Scoreloop offer a way for games to share high scores, leaderboards and
to establish a social network among users, but are not designed for broad application

49

use. This points to an opportunity for a user profile management API that can be
shared across applications in a read-write fashion.

Certification: getting the stamp of approval
In 2011, mobile platforms are maturing and vendors are learning from past mistakes.
As such, certification no longer seems to be a top-level challenge for modern platforms.
Older platforms, like Java ME and Symbian, are still plagued by certification issues,
particularly cost. This is especially true for Java, with nearly 50% of developers who
take their applications to market reporting issues.

Newer platforms, like iOS, suffer from different go-to-market issues. Some 38% of
respondents who develop primarily on iOS, report that application approval has
‘unwritten rules’ in the App Store, while over 35% of them find that approval takes too
long.

Android developers are the most indifferent to certification challenges, due to Google’s
‘hands-off’ approach to application approval. Nearly 40% of respondents state they
have no issues, while another 20% state they don't need to certify their apps. Mobile
web is perhaps the easiest platform with regards to certification, since there are (as yet)
no formal requirements for submitting widgets or other web applications.

Overall, certification no longer seems to be a top-level challenge for developers, as it
was in 2010. Instead, in 2011, the top two challenges encountered by developers are
time-to-approval and the complexity of app signing, reported respectively by 29% and
19% of respondents who take their apps to market, irrespective of their main platform.

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51

WHY, HOW AND WHEN DO BRANDS GO MOBILE?

4. Brands Go Mobile

The developer equation
Our Developer Economics 2011 report has analysed in depth the changing landscape of
today’s mobile software industry – from Apple to the mobile web – including the needs
and wants of today’s mobile innovation machine: software developers. But we shouldn’t
forget that while developers and platform vendors have spawned the apps
phenomenon, it’s the global brands and local businesses that are funding and fertilising
the mobile app economy.

Brands, from The Times and Burberry, to Gap and BMW, across every single industry
vertical (FMCGs, music, retail, publishing and entertainment), from New York to Seoul,
are jumping on the app express train. Some brands are building their own development
teams to better control and integrate their apps into their core products. A few are even
turning mobile apps into new profit-making business entities.

To understand how brands are going mobile, we looked at over 50 leading international
and regional brands, through 20 one-to-one interviews with digital agencies, media,
retail and Internet companies across five continents.

The innovation is not just coming from the entrepreneurial developers, who create the
bulk of nearly one billion apps out there. To date, tens of thousands of companies have
“gone mobile,” from physical and online retailers (Walmart, Amazon) to music
companies (Sony), international sports teams (Chelsea FC), newspapers (The
Guardian), transport institutions (TFL), social networks (Facebook) and car
manufacturers (BMW). In going mobile, each has extended the reach of their brand,
while at the same time injecting much-needed funding into the app economy.

Mobile is global. Mobile applications and services are no longer being limited to one
specific country - for example companies that offer a global Internet service provide
global access to their app.

In most instances, an international strategy is outlined based on core app
functionalities, followed by specific language and cultural adjustments made at a local
level. Most of the activity is happening in regions with a high penetration of iPhone and
Android devices, i.e. North America and Europe. At the same time, areas such as the
Middle East are gaining interest, due to high smartphone penetration, high disposable
income and fast technology adoption.

52

The Brands’ Journey through Mobile
It seems everyone needs to have a mobile app these days. It’s an imperative that has
even made it into the boards of some global companies, from realtors to multinational
retailers and beer brands to clothes designers. Yet, despite the diversity, we found that
all companies go through a three-stage journey as they extend their digital strategies
into mobile. We call it the brand journey through mobile.

The Newbies
In their first steps in going mobile, most companies think of an app as a way to
‘advertise’ whatever product or service they are providing. Most early apps are
developed for the iPhone, and do not do much more than promote the physical or
digital service the brand is offering. In many cases, it’s the digital agency that
proactively pitches a mobile app as part of an existing digital marketing budget. In
other cases, it’s the CEO who storms into the marketing manager’s office, enquiring
why the company does not have a mobile app yet, when his daughter’s iPhone is
crammed with apps.

During this Newbie life stage, all that brands want to do is experiment and see what is
possible on this new digital medium. Efforts are focused on providing apps that extend
the brand’s PR and advertising efforts. In the more mature cases, apps are extended to
include some kind of service (a ‘brand butler’), but the main objective remains that of
increasing brand awareness.

Time-wise, the initial roll-out takes about three months, with up to one year in some
instances.

53

Platform-wise, most brands irrespective of “I love how even the most boring
industry have focused their initial foray into US employers are looking for
apps by developing services on Apple’s iOS. "rock star" developers.”
The platform is perceived as simple and
Sebastian Brannstrom (@teknolog)
accessible, providing a clear structure to use
Senior Platform Engineer
and develop on. iPhone users are also Zimride, Inc.
perceived as more receptive to trying out new
apps. Distribution is straightforward, since
the Apple App Store offers publish-once-sell-everywhere convenience. At the same
time, very little thought is given to how the effectiveness of an app is going to be
measured – other than number of downloads and maybe frequency of use.

As their mobile strategy matures, brands aim toward higher levels of integration with
their digital and, in some cases, their corporate strategy.

The Street-Smarts
Once the first mobile apps are out in the field, senior executives start to demand much
more from the channel. The key question for Street-Smart brands becomes, “How can
we use this mobile channel to provide a better service?” Or, “How can we help
customers make their life easier?” In most cases, the core application is provided for
free, so as to ensure reach.

In the initial stages of any organisation’s foray in mobile apps the tendency has been to
subcontract the app development to a mobile software house or their digital agency.
Now that demand is scaling Street Smarts are bringing more of the design and
development in-house, only outsourcing basic coding functionalities to freelance
developers. The objective behind this is twofold: to provide better integration with the
current digital or overall business strategy, and as importantly, to have tighter control
on cost, process time and overall quality.

Platform-wise, Street Smarts extend their apps to Android handsets, and increasingly,
to those platforms featuring web browsers. Global brands integrate mobile offerings
within their overall advertising strategy, for example viewing apps as an advertising
channel, avenue for community interaction, or even a channel for cross-selling users
from one product to the next.

The Connoisseurs
Connoisseurs are the “experts”, the brands with a successful digital business, whose
move into mobile has been integrated within their overall strategy early on, as another
touch-point. Most verticals have not made it to Connoisseur status yet, except for
games and media companies. Games are one of the most mature verticals, with mobile-
only versions of traditional games and social games being developed for mobile for
more than five years. In turn, media companies have recently become aware that
mobile is one of their top priorities, and that all mobile initiatives must be driven by
clear business objectives. As an example, mobile apps within media companies are
increasingly driven by editorial strategy.

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Connoisseurs are more business-case savvy, looking into the potential returns before
any investment is made. The final decision depends on budget size, and we find that
although in most cases the digital marketing directors make the final decisions, board
members and senior officers are becoming more involved in the approval of design and
functionality concepts and business case.

Mobilisation drivers
What drives brands into mobile? There are several reasons brands are using to extend
their digital strategies into mobile:

• Public relations and advertising, so as to increase brand awareness and accessibility
• To increase customer retention and loyalty
• To enhance the customer experience, for example through location-specific services
• To create a stronger community around the brand. Mobile and apps are seen as a
newfound social connector, for example for keeping people connected within
events, or for creating communities around popular interests like running, music or
organic food.
• To increase retail or point of sales channels and make mobile shopping easier
• To provide instant gratification to customers
• To attract and keep customers longer in a physical location

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• To keep-up with competitors, especially as first mover advantage in helping a brand
project an innovator image to its customers.

Most companies across industry “As an app agency for brands, 100%
verticals have focused their mobile of our inbound calls are about
initiatives on the B2C market. Interest iPhone, 60%-70% of these also
in B2B, and more specifically, internal & request Android. iPad is the third
operational efficiency apps, is only platform, with about 50% of calls.”
recently gaining momentum.
Alex Trommen
CEO
In the B2C market, the main reasoning AppsFactory.de
for developing apps focuses on
extending above and below the line PR
and advertising efforts and increasing
brand awareness and accessibility. Brands are commissioning apps to support a
product launch or even create a ‘brand butler’ Most media companies provide a mix of
infotainment services, such as real time football results from Sky Sports. We are also
seeing a rise in branded utility apps, helping a user find the nearest bike shop or store
the details of their loyalty cards. The end goal is usually to aid the user carry into mobile
what they do on other digital or physical channels.

From Apple to web: charting a mobile platform strategy
For brands, extending their reach to mobile is a very different beast, compared to any
other digital medium. Whereas on the web one needs compatibility with two or three
mainstream browsers to reach 80% of users, going mobile means using the top three or
four mainstream native platforms (iOS, Android, Symbian and BlackBerry) to reach
just over 20% of the devices sold, on average.

It gets more complex; a platform choice is not just about Apple vs. Android, but a
sophisticated trade-off between functionality, user experience, reaching the right
customer demographic and the cost of rollout.

Beside these dimensions, companies need to consider demographics (who are Apple or
Android users and how do they use apps?), functionality requirements (can we
implement this or that feature?), as well as the cost of rollout (how easy is it to produce
the app and maintain it?) and of course the business model (how does it make money?).
No doubt most brands are finding it very complex to decide which platforms to focus
on.

Apple’s and Google’s mega-marketing campaigns can convince a fair share of marketing
managers that their respective platforms are all that’s needed. After all, most marketing
managers are new to mobile, and underestimate the complexities of this new medium
and the many trade-offs it involves.

Platform priorities are mixed, but the core challenge is common – market penetration
and reach across the brand’s customer base. In our discussions with executives
responsible for digital strategies, we found that hardly any organisation tends to
develop across all platforms.

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Organisations developing B2C apps, i.e. “The problem with platforms like
targeted at consumers, are extending their Samsung’s bada is that they lack
offering (in order of importance) to Apple, to hype and mindshare among brands -
Android, to mobile web, to BlackBerry and nobody asks for bada projects.
finally to Windows Phone 7 (although with a Symbian is starting to enter this
mix of hesitation and expectations). category, too.”
Maximiliano Firtman
Most of the executives we talked to were Forum Nokia Champion 2005-2011,
Adobe Champion 2011
hopeful that in the future all the basic apps
and mobile services will be developed on
HTML5, citing a number of reasons: mass
market reach, cost efficiency and the fact that their customer base is already accessing
the company’s website from their mobile phone.

HTML is already the platform of choice for companies developing B2B (business to
business) apps, i.e. applications paid by the corporate IT manager or CIO - an estimated
40% of which are developed by system integrators. These are point solutions like
applications that connect to Exchange, SAP, sales force and enterprise resource
planning applications to be used by company executives. The default platform for B2B
apps is HTML, not just for deployment on mobile web browsers, but also by converting
HTML and JavaScript into native iPhone and Android apps using tools such as
Appcelerator, PhoneGap, RhoMobile, Sencha and The M Project.

First walk, then run: challenges in going mobile
We believe that where there is a company website or a corporate intranet today, there
will be a mobile app tomorrow. Such is the momentum behind consumer brands and
virtually every self-respecting company out there, whether it’s B2C apps for enhancing
the core business, or B2B for mobilising the corporate intranet.

But in storming into mobile, digital strategists need to heed best practices from
companies that have established successful mobile apps.

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Table: Best practices for brands and organizations going mobile

- Establish objectives and measure performance against
Setting objectives
expectations
- Identify more relevant evaluation metrics (such as
frequency of use, behaviour and engagement). Current
platform metrics (number of downloads) are often not
relevant

- Look for business models that support the investment
Business Model
required to develop and run the mobile app

- Budgets are still small compared to what is spent in
traditional marketing and sales channels. Your marketing
budget can go a long way in mobile
- How much revenue can realistically be generated directly or
indirectly?
- What functionalities can be added to provide enough value
to justify and attract revenue?

- How much revenue can realistically be generated directly or
Revenue
indirectly?

- What functionalities can be added to provide enough value
to justify and attract revenue?

- Provide users with an experience that is aligned with overall
Customer
brand values
Experience
- Be wary of slow download rates and limited data coverage
and accessibility that negatively impact the customer
experience

- Be wary of look-alike, non-official apps in Android Market
Security
or other app stores that don’t enforce quality control

- Mobile payments are easier said than done. Leverage on an
existing payment provider with a trusted security
infrastructure

As always, the mobile app economy is continually evolving – and often in surprising
ways. The platforms race continues in twists and turns, new business models spring up,
and apps take retailing into new levels of sophistication. Apps stand to power the fast
moving digital goods world.

We ‘ll keep watching the app economy closely. You should, too.

The VisionMobile team
Twitter: @visionmobile

58

Ecosystem Showcase
We ‘d like to thank the following companies, across the mobile ecosystem, that helped
make Developer Economics 2011 possible.

59

knowledge. passion. innovation.

60

Developer Economics 2011

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