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Making profitable
Consumers’ appetite for compelling and innovative mobile apps seems
limitless. In fact, research firm Gartner estimated that mobile app store
downloads topped 8.2 billion in 2010 and will more than double in 2011 to
17.7 billion downloads.
mobile apps
Perhaps the biggest success story of 2010 is Rovio’s Angry Birds
application, which generated 110 million downloads as of mid-March
and showed no sign of slowing. Angry Birds has even generated sales
of ancillary hard goods such as toys and t-shirts, giving mobile develop-
ers a taste of the moneymaking potential a popular app can deliver.
Yet not every mobile app finds the type of success that Rovio has.
In fact, there are thousands of apps that go unnoticed by consumers.
Why? Sometimes the fault lies with the application, but often the prob-
lem is the business model or the lack of discoverability.
Creating a successful app encompasses much more than just having
a good idea. To get an app noticed developers must figure out ways to
differentiate their app from rivals, whether that means getting third-par-
ty reviews, enlisting the help of an app directory, or promoting the app
on social networking sites.
But the app discovery process is getting better, some companies are
specializing in application discovery and using recommendation engines
and other mechanisms to help consumers find apps based upon their
interests.
Nevertheless, making a successful mobile app is far from being
an easy endeavor. In this ebook, “Making Profitable Mobile Apps,”
FierceMobileContent will delve into such issues as the business model
(free vs. paid), differentiating your app from the competition, picking the
right distribution model and more.
Sue Marek
Editor-in-Chief /// FierceWireless
Platinum sponsor:
3
Mobile Applications
5
Free or Paid: Which
8
Making Profitable
9
Today’s App Mantra:
12
Developers Must
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Business Apps: The
Gold sponsors:
Continue To Grow Model Works? Mobile Apps Make It Better and Consider Scale, Ease Next Frontier?
At Stunning Pace *Sponsored Content* Make It Known of Use When Selecting
an Operating System
Mobile Applications Continue said Rich Wong, partner with ing overall app industry growth. the next nine months or so,” said ably interesting as that develops,”
1 6
less than five years old but applications will have been down- mobile video. players are moot points.
it already generates billions loaded from mobile app stores An ongoing industry trend is the Location-based services Context-aware service “Apple and the other
2 7
of downloads annually. And since the launch of the Apple App proliferation of app stores, with vendors are doing a good
as apps such as Angry Birds Store in July 2008. open, multiplatform storefronts Social networking Object recognition job of tying customers into
3 8
generate sales of ancillary “It’s stunning to realize how being the latest wave. High-profile the platform itself, at least
hard goods—plush toys and much better the ingredients have app store GetJar Networks recently Mobile search Mobile instant messaging for now, but that may not
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t-shirts, for instance—this gotten in a very short period of attracted $25 million in Series C be material,” Vartabedian
area is becoming a part of time. I think that’s probably the funding, and Accel, an early inves- Mobile commerce Mobile e-mail said. “The transition to the
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mass public consciousness primary reason there’s an explo- tor, also participated in this latest Cloud is something all of
every day. sion of interest and some early round. The funding confirms the Mobile payment Mobile video the content providers are
According to ABI Research, massive leaders in this space,” importance of these stores in driv- looking at.” l
Source: Gartner
Sponsored Content
continued from page 6
recently by GigaOm Pro said their
pany has measured a drastic shift in
revenues from advertising to in-app
More revenue models
will emerge
Making Profitable Mobile Apps
apps generate less than $100 per purchasing during 2010. In the iOS While the in-app purchasing model by Edward Schmit, Director, AT&T De veloper Progr am
month in advertising. Just 9 percent marketplace in 2009, advertising for free apps has disrupted other
said their apps generate more than generated most revenues, but by approaches, this is still a nascent
$20,000 per month. Feb 2010, in-app purchases domi- industry and new business models So you’ve created your app they are new, so you do not poor the user would not con-
The advertising approach has rap- nated. These purchases generated are certain to emerge. and released it into an app store. want to spread out your market- sider opting for a paid version.
idly been replaced by the freemium 80 percent of revenues in 2010. “There are permutations to the Now you wait for the dollars to ing effort over time. Create an If you have a free app, consider
model, which offers developers According to Farago, 3 percent free vs. paid models that are still roll in. A few days go by with integrated launch plan to build in-app billing (where available)
the opportunity to create a bigger of all app users are making in-app coming out,” Chand said. “This is minimal traffic for your app. on the new app momentum, and or advertising.
audience combined with the oppor- purchases while only 1 percent will a new space and it will evolve.” What’s happening? You’ve dis- focus your marketing tools and Fourth, if you start hav-
tunity to upsell customers to other click on a banner ad. The in-app One example, introduced by covered the vexing issue of “App funds right at the time of your ing success with your app on
products or services. The model, customers are making repeated pur- Tapjoy, is a pay-per-action adver- Discovery!” Developers are still launch. Make sure you use meta one platform, begin planning
introduced by Apple as in-app chases and they are spending from tising service that allows iOS and making money, but it is not as tags—they are not hard to cre- your cross-platform strat-
purchasing in October 2009, has 99 cents to $100 for these goods. Android developers to reward users simple as in the past when you ate and can yield big benefits. If egy. Some developers make
recently been adopted by Google “You can make so much money,” for completing some type of action- could write a silly application and
for the Android Market. This will he said, but there’s a caveat. “You able feature within an app. The then watch the money roll in. In
help propel its use. have to design a good experience. company inserting the suggested order to get your app discovered, If you start having success with your app on one
Peter Farago, vice president of You want people to come back action pays the developer a fee for you need to consider, quality, platform, begin planning your cross-platform strategy.
marketing at Flurry, said his com- again and again over time.” each action completed. l social media and pricing. Some developers make more money on platforms with
First, create a GREAT app. a smaller installed base simply because there is less
This seems obvious, but with competition. This can also help with recommendations.
Revenue Shift from Advertising to Virtual Goods Sales the wave of apps the quality has
gone down. Make sure you have
an intuitive design. Don’t just
$10
have your technical friends look you have enough funds, con- more money on platforms
9 Virtual Goods Sales (In-App Purchases) at it. Make sure you do adequate sider getting assistance from with a smaller installed base
user testing to ensure the inter- firms like Tapjoy or WDA who simply because there is less
Average Monthly Revenue per User
8 Advertising Revenue face is simple and intuitive. can help you create a distribu- competition. This can also
Many apps are sold based on tion strategy. And, check out help with recommendations.
7 recommendations from friends— the Launch section at AT&T Finally, in-app cross promo-
if your app is bad, you will not Developer Program website tion is another method of
6 get these referrals. Don’t forget to get great tools and ideas. boosting sales. If you have
to search through the catalog Third, think about your multiple apps, use the load
5
and spend time thinking of a monetization strategy. Many screen to advertise your other
4 good app name. developers under price their apps. Alternatively, negotiate
Second, take full advantage apps or give really good ones to trade advertising with other
3 of your launch. Use social away for free. With intense developers who already have
media and tools to get those competition, the “freemium” games in the market. In the
2 downloads the first week—it’s pricing model seems appeal- end, get out there and let the
no secret that the most suc- ing—in theory, you gain loyal world know about your app! l
1
cessful apps are those on the users who will pay more later
0 top selling list, and your best for the same app with more
chance to crack it could be features. These conversions
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Source: Flurry
Operating systems
remain in flux
Developers have many criteria
for selecting an operating
system, but the most impor-
tant factor of all is its potential
reach. Paul Reddick, CEO
of Handmark, says the total
addressable market for an app
is so fundamental to success
that developers should make
it the number one, two and
developers plan to extend enter- (each with more than 20 percent), own enterprise apps in-house. their enterprise software platforms,
prise apps to mobile devices within followed by unified communica- “In all cases the opportunity is Harmon suggested.
the next year. tions (more than 15 percent). there,” Stephen Drake, program Mobile operators want to help
In January, IDC Research asked Mobile payments, M2M and vice president for mobility and develop and distribute applications.
mobile enterprise developers to approval software were each telecom at IDC. “Depending upon Verizon Wireless offers business
characterize their current work or mentioned by fewer than 15 per- the play, we’ve seen a tremen- apps in its V CAST Apps store
work planned for the next three cent of respondents. dous amount of new ISVs coming and it has launched packages of
months. Social business applica- Lots of firms are involved in in to develop apps that can really apps for vertical markets. Sprint
tions and standalone productivity mobile application development address some of these new operat- is considering establishing a busi-
tools that are not integrated with including independent software ing systems and new opportunities ness application marketplace and
the corporate back-end infra- vendors, operating system and app for those clients.” is working on a solution to ease
structure have the most activity store organizations and mainstream But not all small-to-medium sized discoverability and ordering of
(each with more than 30 percent enterprise software solutions businesses are set up to develop business applications for business
responding). Business intelligence providers that want to add mobility applications and many need off- corporations want custom solu- Some opportunities will emerge customers and their employees.
apps, field force and sales force to their products. In addition, some the-shelf products from application tions. They expect to have in-house because businesses are allowing Developers that may not have
automation were also popular companies are developing their storefronts. In addition, many teams eventually, but need consul- employees to use their personal established relationships with
tants in the meantime. devices for work activities. Com- operators before may find rea-
panies will need security solutions son now to join their developer
Expertise in certain and ways for IT to manage the programs, because SMBs and
Categories of Business-Focused Applications Being industries will apps. They are also expected to enterprises have close relationships
Developed Now and in the Next Three Months foster innovation want techniques for sandboxing with their telecommunications
“Most of the innovation and the suc- corporate apps and information providers and seek them out
(Developer Survey Conducted January 2011; Multiple Responses Allowed) cess we see comes from third-party separately from personal applica- for services and expertise.
developers who see an opportunity tions on employee devices. Verizon Wireless has hand-picked
or market need and have the exper- about a dozen developers who spe-
Social business
tise and knowledge and are able to Private app stores will cialize in specific vertical markets to
Standalone productivity tools develop something and bring it to offer customized apps recommend to companies.
(not integrated with corporate back end)
market to sell to corporations,” said Currently, some enterprise soft- Laura Osbaldeston, associate
Business intelligence applications John Tudhope, director of applica- ware firms are using consumer app director for SMB strategy, partner-
(e.g. CognosMobile) tions marketing at Sprint. stores to distribute mobile applica- ships and applications and the
Some of the most interest- tions to take advantage of existing Verizon Developer Community for
Field force automation
ing innovation will occur as solutions and avoid the need to business markets at Verizon Wire-
businesses create new cat- build and deploy custom distribution less, said the company wants to
Sales force automation egories of applications. systems. Techniques to allow bulk- help developers from the consumer
For example, many large consum- licensing of software for companies market learn about enterprise
Unified communications er brands are now building mobile represents an opportunity for inno- trends and needs so they can prop-
business-to-consumer applications vation, according to Harmon. erly target their work and decide
Mobile payment/mobile billing and many corporations are build- While consumer oriented stores what types of applications to build.
ing mobile business-to-employee and apps are available and con- “The challenge developers have
Machine to machine applications. Digital marketing firms, venient, many companies in the right now is that they’ve been
which previously performed web future will build their own private so consumer focused because
Approval applications site development for corporations, app stores so they can control that’s where the money was,
will help with this work, Harmon what employees have access to and there isn’t a lot of under-
0 5 10 15 20 25 30 35 40 said. In the future, business-to-busi- and install on their devices. Some standing, unless they’ve come
(% of respondents) ness mobile applications will create may also want specialized stores from industry, to realize where
n = 608 Source: Appcelerator and IDC’s Mobile Enterprise Developer Survey, 1Q11 another new need. for customized mobile versions of there’s a need,” she said. l