The document discusses how Apple introduced a software developer kit in 2008 that allowed third-party developers to create applications for the iPhone, vastly improving its functionality. This led to over 100,000 apps being available by 2009, driving new interest and market share for the iPhone. Meanwhile, other smartphone manufacturers struggled to compete and lost profits as they lacked an "app store" ecosystem of their own.

1. A New Paradigm their customers are focusing a great deal of their time
In March 2008, Apple innovated the product and attention. Bay Elliott, executive vice president of
significantly by publishing a software developer The Farwell Group, Inc., who counsels private equity
kit, made available freely to third-party developers, investors on the shared ownership industry, says,
which enabled programmers to develop feature-rich “It is clear that [for any business] you have to give
native applications for the iPhone. These third-party people the freedom, flexibility and functionality they
Courtesy of Apple
“web applications,” developed using AJAX web have come to expect and demand. Smartphones
programming techniques – which permits the “client” appear to have already become the preferred access
(in this case, the iPhone) to retrieve data from a web and commercial device – today and probably into the
“server” in the background, without interfering with the future.” As innovation continues, it’s likely that pricing
experience and behavior of the existing page the user for these products and their service contracts will drop
is interacting with – meant that the iPhone could be considerably from present levels, making iPhones and
updated with useful as well as frivolous new tools that other smartphones all the more accessible.
would vastly improve the utility value of the product,
in effect enabling it to mimic much of the capability of With the introduction of the App Store and rapid
a desktop computer connected to the Internet – all in growth in available apps – surpassing 100,000
the small form factor of the iPhone, which can fit in a in September 2009, double the number from five
user’s pocket and be fully accessible wherever there is months earlier – already high interest in the iPhone
data coverage. While the development code standard (and to a lesser degree, smartphones overall) hit
Does Your Shared-Ownership was available at no cost, loading an application onto
the iPhone was only possible after paying an Apple
new levels, in large part explaining its remarkable
growth in market share, despite the iPhone’s high
Company Need an ‘App Strategy’?
Developer Connection membership fee ($99-$299), price and the economic environment. Meanwhile,
testing and debugging the application as necessary, other manufacturers were forced to cut prices on
and receiving approval from Apple that the resulting their newest, non-app supported phones, decimating
Some startling statistics suggest you just might “app” met its quality standards and could be deployed.
For more information on Apple Developer Connection,
their margins and profitability, throwing once-vaunted
companies like Motorola and Ericsson into disarray.
By William J. Brown visit developer.apple.com/iphone/program. These firms and the leaders such as Research in
Motion (maker of the Blackberry) and Nokia, went
The capability to write applications for a powerful – and back to the drawing board, to design new products
Since being launched on June 29, 2007, Apple that Apple introduced has seemed to reinvent the
already popular – mobile device attracted thousands and their own “App Stores,” which so far have failed
Inc.’s iPhone has continued to drive radical entire segment. Reported to have been designed over
of programming developers, and from this community to capture the same kind of attention or sales as
innovation and upheaval within the global 30 months’ time and at a cost of US$150 million,
were quickly spawn tens of thousands of apps, serving the iPhone.
wireless telecommunications industry. the iPhone’s ingenious form, with only two buttons
and a refined, flat glossy surface, was viewed as all sorts of wants and needs ... Do you want to see a
radar map of weather in your area? There’s a free app Most notably, Google – which has long viewed the
Now in it’s third-iteration (with a new, improved model “transformational,” and its functions, including the
for that. Want to play interactive golf as or against Tiger mobile web browsing market as a critical plank for
launched each summer just around the anniversary phone’s multi-touch screen and virtual keyboard,
Woods, or, using your iPhone, easily order a couple of its future ad revenue growth – began to develop and
of “Original”), more than 7 million iPhones were coupled with its integrated iPod media player (which
tickets at the movie theater nearest you? Or, learn a has just brought to market its second-generation
sold in 3Q09, which according to advisory Gartner itself was tightly woven with Apple’s immensely popular
new language – Chinese, Spanish, even English? There “Android” mobile platform, intended to directly
Group accounted for a 17.1% global share of all iTunes download store) and its Internet connectivity
are apps for all these things – most extremely polished, compete with iPhone, and at a lower price point. Unlike
smartphones sold – all the more remarkable given which permitted mobile web browsing, instantly
all leveraging the same look and feel of the underlying Apple, Google is not a manufacturer, and it is giving
that Apple had never manufactured a phone of any captured the fascination of technophiles, enthusiasts,
iPhone interface. All available at little cost or even “free” away Android to phone manufacturers to build scale
kind as recently as three summers ago. Prior to the and consumers who loved its ease-of-use and dynamic
(developers set any price they wish; Apple keeps 30% quickly. While it remains to be seen when and if any
iPhone’s emergence, the marketplace for handheld aesthetic. Indeed, Time magazine named it Invention
of any revenue derived from the sale of apps through competitor can stunt the growth trajectory of iPhone,
mobile phones had become saturated with indistinct of the Year in 2007, and based on Apple company
its “App Store”; www.apple.com/appstore). The the emergence of revitalized competition likely means
candy bar and flip phone form factors with ever lower estimates, some 33.75 million iPhones have been
availability of such new tools and apps dramatically an even more rapid migration of consumers to such
pricing points, often sold as “free” when bundled with a sold to-date – with approximately 6.4 million active in
increased the value of the iPhone, which already was robust smartphones, and through them, demand
2-year contract commitment by many of the postpaid the U.S. alone, all the more impressive given the state
a powerful all-in-one phone, e-mail client, and web for and use of ever-more robust apps. Indeed, many
service providers. In effect, the industry was on the of the economy and a demonstrated willingness by
browser ... now, in effect, it could be customized in futurists and trend spotters have been arguing for
verge of becoming, if it hadn’t already, a commoditized consumers to forgo other frills in an apparent effort to
seemingly endless ways. some time that the future of the Web is on mobile
marketplace with lax innovation and little brand loyalty. save more. According to the NPD Group, June 2009,
devices, given their portability, lower cost, and higher
the iPhone attracts users of all ages, and 40% have a
This has led to a self-perpetuating cycle ... as more utility value.
While other manufacturers such as Blackberry and household income over US$100,000. With each new
Nokia were increasingly bringing to market more version of the iPhone, media reports document long iPhones are sold, developer activity increases, as it
increasingly becomes obvious that content providers As Elliott suggested, the implications of all this have not
advanced cell phones, with integrated email and the lines of consumers waiting before dawn to get first the
and brands alike want to be visible and available where been lost on businesses, large and small.
ability to play certain kinds of multimedia, the product latest version of the product.
Perspective Magazine January 2010 Perspective Magazine January 2010

2. To put things in further perspective, Apple reports that already available from independent publishers, apps given the environment where apps are still “new” and
more than 2 billion app downloads have occurred that provide real-time information on wait-times for there is value from being a “first mover.” While Hilton’s
to date – of which, 1 billion occurred in the first 10 rides at each of the four parks, restaurant menus, and app is innovative, one can argue it is only incrementally
months of 2009. While the iPhone App Store has “secrets” observed by other park visitors. The Disney so ... yet, there are hundreds of mentions about it,
launched hundreds of entrepreneurial firms focused Swan and Dolphin hotels, operated by Tishman Hotel guaranteeing significant immediate intrinsic benefits for
on app development, companies across the spectrum Corporation, now offers apps that showcase the the brand.
in many industries have also begun doing so, initially properties amenities through videos and a robust photo
targeting brand reinforcement through novelty games gallery available right on the iPhone. The competitive and economic landscape continues
and entertainment, with many now clearly moving to be extremely challenging, as we all can attest to.
towards apps that bring their core assets – information, What’s the utility value for shared-ownership firms in Through low-cost innovation, companies throughout
content, and commerce – into apps that marry these contemplating whether – and when – an app strategy the shared-ownership vertical can continue to
with transactional capabilities, generate demand and is appropriate? How could it deliver value and return differentiate themselves. An app strategy would require
reinforce the relationship with the customer. on investment? The cost to develop apps varies by perhaps some forward-thinking, and some new skills,
sophistication of the experience that is desired to but it’s likely if you have a website today, you already
Travel Apps be delivered; some popular apps were developed at employ or could contract at low cost, via any number
Within the travel and hospitality industries, app activity no more than the cost of time and materials ... more of options, the resources necessary to try to take
has really begun to accelerate, with two high-profile complex apps could require weeks of development, advantage of an incredible new communication and
launches occurring recently – priceline.com’s The testing, debugging, validation, and budgets of transaction platform.
Priceline Negotiator (complete with William Shatner!) US$50,000 or more, but the upside potential of
and an ambitious app from Hilton Worldwide, called reaching millions of potential users, or thousands of Advantage, as is often the case, comes to those willing
Hilton. The Priceline Negotiator lets travelers use iPhone existing prospects and owners, should be considered in to take calculated risks.
or iPod touch to quickly find and book last-minute the fuller context of your goals.
hotel rooms using priceline.com’s Name Your Own
Price hotel service and save versus published rates, Some ideas for possible applications for the shared-
extending Priceline’s web-based business in an elegant ownership industry:
way designed perfectly for the strengths of the iPhone. • Enable club owners to access some or all of the
Courtesy of Apple
transactional services that are facilitated either online,
Meanwhile, the Hilton app really suggests the potential or offline
for branded hospitality companies to create truly • reate apps that “explore” the areas around resorts
C
extraordinary, value-added user experiences that that are in active sales; this not only serves to drive
drive consumer loyalty and deliver to the needs of the interest in the development, but also to combat post-
traveler. It could come in handy for stranded travelers sales rescission
thanks to a feature that lets you find hotels near you • Browse available and unsold and/or unrented
by integrating with the iPhone’s geolocation capability inventory; permit reservations if back-office processes
(which detects the exact location of the phone, and can be integrated.
then uses the coordinates to “plot” your proximity to • Develop apps that drive merchandising of the
the nearest Hilton property), and gives you turn-by-turn property and ownership, with the promise of a
directions from your current location. The hotels and sweepstakes or contest, with entry dependent on
resorts at hand also include all of those in the Hilton finding “clues” throughout the full app, ensuring that
network – including available rental inventory from its the user is exposed to what you need them to see (if
Hilton Grand Vacations Club timeshare subsidiary, done right, this creates the opportunity for “viralocity”
permitting reservation booking which even includes because there is something of value, and if designed
choosing bed and pillow type (where offered), with the correctly, it could drive referrals and would likely be
added convenience of pre-arranging a room service forwarded to friends and contacts by users, as well
order via the iPhone, tool. There is little doubt that as discussed in the media, akin to free publicity and
companies across the global travel industry spectrum word-of-mouth awareness)
will soon be introducing their own apps, with novel • Rich, immersive resort directories, with links back to
features and commerce capabilities tied to their the primary website
underlying, pre-existing e-commerce and ERP systems. • Better, more efficient and coordinated back-office
It’s noteworthy that very shortly after its release, The operations within your company and at your resorts,
Priceline Negotiator app was the 3rd most downloaded through apps designed around enterprise applications
app on the App Store, with more than one-million that can be then accessed by iPhone or Android-
downloads (both it and the Hilton app are free). fitted employees
For the millions of travelers seeking to experience a The Hilton app reveals the potential for branded hospitality While there are likely many other niche applications
Walt Disney World vacation, as of year-end 2009, companies to create truly extraordinary, value-added user suitable for an app, another reason to pursue such a
experiences that drive consumer loyalty (actual iPhone
there are at last count no fewer than 18 applications screen captures). strategy now is the likelihood of significant publicity,
Perspective Magazine January 2010 Perspective Magazine January 2010