Yesterday I was in Glasgow talking with people about the state of mobile industry. One of the topics that came up – naturally enough – was iPhone. iPhone is a wonderful device and has redefined people’s expectations of the mobile web experience, but I worry that too many developers are carried away by a fatal fascination with iPhone and forget to do some basic arithmetic.
If you’re a clear thinking developer your calculations will centre around an equation that involves the number of iPhone users in the world, the average number of apps each user downloads, the number of other apps you’ll be competing against in the store, the channel effectiveness (how many of the users can your channel or appstore address) and so on. If you’re considering an ad funded model you’ll also factor in the likely app lifespan, i.e. the number of times a user runs it before getting bored, downloading something else and abandoning yours.
Let’s think about just one term in that equation, the number of iPhone users. Talking to people yesterday, one thing that struck me was that the fascination with iPhone and stats like the billion apps downloaded from the store tend to blind people to one important fact. There just aren’t that many iPhones in the world. This year our predictions show iPhone will be significantly under 2% of handset sales. Apple may be influential but it’s far, far away from the shipment numbers of the gorillas in the mobile market like Nokia, Samsung and LG. Even in the smaller smartphone market in 2008 it was number 4 behind Symbian, RIM and Microsoft.
The terms in the appstore equation will become critically important to developers over the next year as the other appstores ramp up. For example, a Symbian Ovi store could maybe address 4 times as many smartphones as the iPhone store. So although Symbian users might be less likely to download apps than Apple users, the addressable market is a lot larger. I’m not saying you shouldn’t develop apps for iPhone, some developers will continue to make lots of money from it. But during 2009 there will be more choices, and it will be important to do your sums before you choose which app stores and platforms you commit to.
Corporate developers aren’t immune to iPhone blindness either. When I see people like banks developing iPhone specific apps I’m very cynical for a couple of reasons. One is that the proportion of customers of the average bank who have an iPhone is pretty small for the reasons I mentioned above. And the second one is that I don’t see the connection to bottom line revenue. I might switch banks for a higher rate of interest on my deposit, I’m not going to switch banks so I can do my mobile banking on a different phone. If you’re a corporate developer thinking about these issues take a look at the research note I wrote a while back on when corporations should develop device-specific mobile apps.
So don’t get carried away by your enthusiasm for iPhone, or anything else for that matter. Do some unemotional calculations before you commit to any platform or app store.
16 responses so far ↓
1 Jerome Perakis // Apr 24, 2009 at 8:55 am
Emotions in brands count, count a lot in fact. So while arithmetics are important, don’t forget about the marketing aspect of launching an iPhone apps. It could generate already way enough return on the buzz talk around the fact that you have an iPhone available, doesn’t really matter if a lot of your customers use it or not… Furthermore, it will let developers start to learn distributing their apps on smartphones, even if the technology will change, they can learn the best practices.
2 Duncan Chapple // Apr 24, 2009 at 8:59 am
Nick, I think you’re right to look at the prevalence of the hardware, but we also need to look at the kind of application and who the buyer is. If an application is being sold through the store to the handheld user, then you have to ask what percentage of users go to the store. iPhone users are familiar with iTunes, and I guess a lot of them use the store. My experience as a user of other handhelds is that the software isn’t optimised to make downloading and installing applications a regular or easy activity. As a result, I guess there are far fewer application downloads even on platforms that are more ubiquitous. That might mean that the iTunes platform could be a good choice.
Of course for applications sold to enterprises, it would be quite different.
3 nick smith // Apr 24, 2009 at 9:06 am
One more stat surely, and that’s something about the propensity of different platform / device users to go online – you bring into the discussion, but not the arithmetic, I think. Might be %age of users who go online, segmented by the kind of things they do online.
Stats I’ve seen (and vaguely remember) suggest that (even allowing for exaggeration) iPhone is way ahead of eg Blackberry (x30 was one figure I saw re Google searching). I’d adjust the number of devices out there for each platform, applying some kind of factor relating to this. So if Symbian users are 4x iPhone users but 10x less likely to download apps / use apps / etc I’d think that matters.
Answer might still be the same (do it / don’t do it) but it would be taking more note of user / customer behaviour, not just device sales.
4 Nick Jones // Apr 24, 2009 at 9:11 am
Jerome, I certainly agree that marketing may be a very good reason for doing an iPhone app because the excellent iPhone experience lets you deliver an app that looks really great. However, I am not entirely sure about iPhone as a way to gain mobile experience. Gaining experience on a top end niche platform (which is what iPhone is) may not help people who might ultimately have to deliver mobile business onto more mainstream platforms using different principles and technology. Technologically speaking iPhone is a strange environment, Objective C programming, major restriuctions in what an app can do, e.g. related to background processing and so on.
5 Nick Jones // Apr 24, 2009 at 9:19 am
Duncan. As with Jerome I don’t really disagree but I’d make two points. Firstly iPhone users aren’t average in any sense, they have very different habits to most other mobile users, I guess they likely fall into the “aspirers” category in our demographic breakdowns. That’s both a strength and a weakness, because at some point anyone wanting to make big money from mobile is going to have to deal with other demographics and devices as well.
My second point is that in the post I was trying to look a little bit ahead, because I believe that during the course of this year several other app stores and ecosystems will add features to make finding and downloading apps easier. And I agree with you, they desperately need to do so. That’s when developers will have to do the sums I mentioned because even if the propensity to download is lower in other ecosystems the larger number of users or a smaller number of competing applications may compensate.
Basically we are just at the start of what will become a very interesting couple of years.
6 Erin White // Apr 24, 2009 at 10:23 am
As a Nokia user, I find it extremely frustrating that there are SO many iPhone apps and not nearly as many for Nokia smartphones. For my mobile purposes, my E71 is far superior to the iPhone – there’s just no “there” there, as far as I’m concerned – yet the apps just keep piling on. Hoping Ovi spreads wings!
Erin White
7 Nick Jones // Apr 24, 2009 at 1:11 pm
I think you’ve hit one one of OVI’s key challenges. If by the end of the year they haven’t fixed that problem and created a vibrant community of Symbian developers and applications they’re in trouble.
8 An App Store Developer War Starting? Oh, Nick, say it ain’t so! // Apr 24, 2009 at 5:08 pm
[...] Ok, so before I write anything else I will remind you that I like my iPhone – so take everything from this line on with a grain of salt. That is a bad thing for an analyst to admit but I didn’t say I like all the arcane and sometimes Faustian agreements that seem to have been made between Apple, developers, and carriers (try upgrading to an iPhone before your ATT contract upgrade period is up and watch the bleeding start). I am also disappointed with some of the design choices apple made and the snobbishness of some iPhone owners (including myself). But, even with all that carnage, I have to say to my great friend and colleague, Nick Jones – I disagree with some of your comments in “Just say no to the fatal iPhone fascination“. [...]
9 Nick Jones // Apr 27, 2009 at 3:36 am
Well Daryl, I only partly agree with you (sorry). I absolutely agree that hope and ego drive developers, and maybe that’s essential; otherwise why would they hack away for months sustained only by coffee, beer and pizza doing things with only a few percent chance of success? Perhaps one of the most important things the Apple store has done is to provide an explanation that spouses, girl/boy friends, parents etc. can understand. “Why haven’t you talked to me for 3 months!”, “Sorry, I’m working on an iPhone app”, “Oh, OK, I’ve heard of those”.
However I also think you’re taking a bit of a PC-like perspective on this. In the mobile world platforms and app stores aren’t separable. Appstores are somewhat of a monopoly. You can’t (yet) put things in the Apple store for Nokia devices, or into the Nokia store for Apple devices. The Android and Ovi stores (for example) will become the centre of gravity for Android and Nokia applications, so if you want to tap into those markets you’ll have to play in those stores. And even though hope and ego are important, the desire to get rich is also a pretty powerful driver and sometimes that will pull developers away from Apple. Apple will never be a numerically dominant player in the handset market; and in fairness they don’t want to become Nokia. They’d rather remain exclusive, high margin and fashionable. We’re never going to see EUR 25 handsets from Apple. So as the appstore game plays out the big numbers in both device and application shipments will be elsewhere.
And finally (sorry for this long response), there’s the element of corporate responsibility. Developers have a responsibility to their employers and shareholders as well as themselves. Part of that responsibility is to choose the technology that’s the most appropriate to the business, even if it’s not the technology that the developers want on their CV. For mobile applications aimed at a broad consumer demographic, if the question is “how do we reach the most customers”, the answer is not iPhone.
10 Richard // Apr 27, 2009 at 6:10 am
Until the Ovi store drops its certification requirements for Java Verified then I don’t see it gaining any traction at all with developers.
As for the other stores, I keep seeing messages like this:
“I have a popular app on iPhone, Android and BlackBerry.
The app makes 10x as much on the iPhone as on Android, and more than 20x as much than the BlackBerry.
So… iPhone>Android>Blackberry IMHO “
11 Paul Wisely // Apr 27, 2009 at 7:29 am
Hi Nick, just how many apps are you trying to sell? Saying ‘there aren’t that many iPhones in the world’ and ‘under 2% of global handset sales’. suggests the proposition is aiming a tad high. The iPhone apps opportunity is more about iTunes than the iPhone, or rather the wonderful simplicity of getting the app onto your iPhone (or iPod Touch remember). The iPhone apps market place is so far ahead of the competition it is currently out of sight. Based on the current volume and growth of the iTunes Apps Store Users it will be some time before any competitor interface will gain sufficient traction to even claim it is a rival. Until then the basic arithmetic surely stacks up overwhelmingly in favour of developers considering how best to optimise their proposition for iPhone.
ps. please send any redundant iPhone developers my way!
12 Adam Birr // Apr 27, 2009 at 8:15 am
As a J2ME developer, I am interested in point which Nick Smith mentions. Sure, there are an order of magnitude more java enabled phones than iPhones, but how many of the owners of Java enabled phones download apps? I know of a number of people with Symbian handsets, and most of them just the preinstalled apps (or even just use it as a phone). When I have tried to give them the apps which my company develops, the requirement to establish a network data connection normally puts them off because they don’t have a data plan. However, I would argue that to find an iPhone user who only uses their iPhone in this way would be fairly rare. The restrictiveness of the Apple App store is a good thing for the iPhone user. The iPhone user knows that the app will work (not true of all apps which have claimed to be N95 compatible which I have downloaded on my handset), the provisioning process is the same for all apps within the App Store, they know how to access the application once downloaded (try finding a J2ME app on a Windows Mobile device – very tricky!), They aren’t bothered about the data charges as it is included in their network tarrif. Plus, you rightly point out that the typical iPhone user is an aspirer.
13 Nick Jones // Apr 27, 2009 at 8:16 am
Paul, I’m not disputing that Apple is way ahead in the appstore proposition today. But our job is to look to the future as well, and given that there are platforms altready shipping about 4x as many handsets as Apple they may well offer better profit potential during 2009 even if they don’t have a great store today. And given the tiny proportion of iPhone users corporate B2C developers often ought to look elsewhere even today.
And the Apstore growth and volume isn’t an umixed blessing. For a developer to stand out amongst 35,000 other apps all aiming at a relatively small population of users with a short attention span is a challenge. However wonderful iPhone is today it won’t be able to stay as far ahead forever.
14 Nick Jones // Apr 27, 2009 at 8:21 am
Adam, you’re dead on about the propensity of iPhone users to go online which makes life much easier for developers. And part of that problem is (IMHO) the fault of the operators who haven’t been articulating the value of data contracts to non-iPhone users. Interestingly they’re getting a little bit better at this, Voda sent a message to my technophobic wife a few days back asking if she’d like the mobile web added to her contract. But they clearly aren’t making the case very well because she had to come and ask me what the mobile web was.
15 Kelly // Apr 27, 2009 at 9:54 am
Nick make no mistake, the iphone is a cool device. In my estimation, the biggest problem it faces in enterprises is in the back end systems to implement and support the iphone. You still need to get access to your data, and enterprises have rules and security around that access.
It is almost like the changeover from the mainframe to PC days where cowboy users cut the cord from the mothership to go off to create and use applications that are no longer controlled by the business to do business.
How many serious enterprises are going to use itunes as a corporate/enterprise level management system? RIM had to come up with the BES and Microsoft has created SCMDM, and it is commonly thought if Nokia offered such a system pre-iphone, they could completely rule the world.
If/when Apple provides enterprise level tools for securing, deploying, and managing the iphone, it could be game, set, match for mid to high end devices, even for a giant like Nokia.
16 Nick Jones // Apr 27, 2009 at 10:09 am
Kelly, I’m in two minds about the point you made. At one level I can’t disagree, no way is iTunes a corporate application distribution and management system and it won’t become one. And to be honest I don’t think Apple care much about corporates in any case, they’re a consumer-first company. They will do the bare minimum for corporations in terms of security, management etc. And that comment is not a criticism; from Apple’s perspective that’s a sensible commercial decision.
However if we turn things around and look at it from the corporate perspective I do wonder if some corporates may redefine their expectations of security, management, provisioning and so on. Not for everything, but maybe for some applications. Some applications (like FFA) will always need professional grade devices and tools.
But I am seeing a bit of a trend for some corporates to deliver applications onto employee-owned devices. Perhaps not for the most critical applications, but for some of the more lightweight functions. And if this continues, then it may well be the case that consumer appstores from Apple, Android and Nokia do become a part of the corporate software distribution environment for some applications and employees. I suspect consumerisation will take corporations into some very strange places in the next five years.
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