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Why is everybody talking about apps?



The last few years everyone seems to be talking about “apps”, if you are a runner there is an app to provide all kind of info for your running workouts, if you need to go anywhere there is an app with maps that will guide you via GPS, if you want to video conference there is an app to do it, if you want to do karaoke with your own music, manipulate a photo, read your favorite news, interact in social networks, check your credit card reconciliations, play a game…there are apps for all that…even if you want to simulate farting, unfortunately there are many apps to do it too.

There are several reasons that have contributed to the apps explosion, explosion that hasn’t reached yet its maximum level.

The main reason has been the popularity of Smartphones, mobile phones that offer many more features than simply a phone call or texting. These phones are more and more powerful and they are already similar to PCs and Laptops. Smartphone sales are not yet comparable to the sales of traditional mobile phones, they are only about 40% of total sales, but it is clear we are in the middle of a new trending. While the total mobile sales have declined -1.5% during Q1 2012, smartphone sales have grown +42.5% YoY compared to the same quarter in 2011. The forecasts indicate 686 million smartphones will be shipped during 2012 (source: IDC).

The next reason is that all smartphones come with a marketplace, which facilitates sell and distribute apps. Let’s think for a second how hard was before the distribution of your own software, you had to deal with local distributors in order to sale your product in local retails, another option was to sell via Internet, but then it was harder for users to trust the download as there weren’t easy mechanisms for them to identify a safe software free of malware and spyware.

Nowadays any company or single developer can create their own apps and access to a global market in a short time, on the other side the users can trust better the software they install as they access it via a trustable marketplace as the ones from Microsoft or Apple, which both check every single app uploaded before it is published.

Finally, it is hard to find any other device you own that is always as near to us as a mobile phone, otherwise just try to think how many times you leave your phone more than 2 meters away from you.

Checking the smartphone sales figures, how easy is for the users and developers and how companies can be more close than ever to us, it isn’t surprising that many companies and single developers having started to create their own apps and games to be the next Angry Birds.

As you can imagine having success with your app is not that easy, a recent study conducted by Adeven indicated that about 400.000 apps in the Apple Appstore are zombies, which means 60% of the apps in the AppStore have never been downloaded.

So it seems obvious that just creating an app is the key for success, developers will find fierce competitors and the difficulties to obtain the necessary ROI for their work, since it is very common to find free apps or apps priced under $5. Therefore, it is necessary that as a developer you plan your marketing app appropriately or that you count with partner who can do it. It is also important to select the right business model for your app, the commons are:

  • Single payment. The user pays just when he downloads the app. The main risk in this model is to do not have downloads enough to obtain a ROI. In addition, once you have sold to all your potential market and there aren’t more downloads you will not be able to generate more revenue from your current users.
  • Ads supported. In this case, you still need to have a big amount of downloads and make sure users spent long enough time to display your ads.
  • In-app purchase. This is will probably be one of the biggest revenue streams in the near future as it allows to create revenue on existing users. It consists of invoicing users for new content or features, i.e. in a game you might want to offer new weapons or maps after an additional payment, or just think in how Kindle works, the app is free but you pay for each book you download.
  • Subscription. Following a similar model to the cloud computing, you can invoice your users just for the use of the app, if you stop using the app you don’t have to pay. Think for instance in NetFlix you pay a monthly or yearly fee that gives you access to their content.
  • Combination of the previous ones. For instance, you can create a free version of your app that is supported by ads and paid app without advertising.

As I was saying at the beginning the apps business hasn’t reached yet the saturation point and it is still growing very fast. This is because in addition to rapid growing smartphone sales, we need to include now the tablets and also Desktop PCs + Laptops. The arrival of Windows 8 will potentially convert the Windows Store in the biggest marketplace considering the installed base of Windows PCs

Because all this, the forecast for 2014 shows the app business will reach $35 billion and the app downloads will grow from 10,7 billion in 2010 to 76,9 billion, reaching up to 182,7 billion in 2015 (source: IDC).

It is reasonable to say that the next years will be more than ever the developer years, which reminds me the Steve Ballmer’s quote:

“Developers! Developers! Developers!”

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