Mobile Market Wrap-up for Nov 6, 2009

“What in the world is that?”  Simple…that’s Verizon’s iPhone killer, the Droid, which is not a single device but an army of devices Verizon is adding to their arsenal (it’s hard to avoid being cheesy when writing about Droid).  As I’ve mentioned in previous posts, Verizon is going on a full assault against Apple/AT&T, and this week Verizon’s first Droid device launched.  There were a couple well written comparisons between the iPhone and Verizon’s first Droid this week that evaluates the phones side-by-side for a variety of features and usability (review#1, review#2).  Which one wins?  Well the reviews call it a tie, so that means Verizon wins in the end.  Verizon doesn’t need a device that flat out beats the iPhone but they need “cool” devices to keep their subscribers happy, on their network, and help recruit subscribers that are disappointed with AT&Ts crappy, awful, non-reliable network.  It looks like Verizon’s done it!  Their first device looks good, has the analysts and consumers buzzing and two more Droid devices are on their way that will offer different consumer price points and features (HTC Droid Eris and third Droid phone).

This week China Unicom reported statistics from its recent iPhone launch, and so far only 5,000 units had been sold since launch (no, I’m not missing a zero, it’s five thousand).  Another misstep for Apple?  Yes.  I think Apple (along with many other US companies) see the big volume potential in China but forgot to do their consumer research and truly understand the market.  If you ship it, doesn’t mean they will buy it.  To keep their momentum, Apple really needs to find a way to drive volume growth for the iPhone internationally since their volume is severely capped in the US without a Verizon deal.  And, once Android volumes increases with dozens (eventually hundreds) of handsets worldwide, app developers will stop focusing on the iPhone and give their attention to the largest distribution channel which makes them money.  So instead of hearing that the app store surpasses 100,000 available apps, we might just hear that the app store has 100,000 outdated, non-operational, useless apps.  It could happen.

Here are this week’s handset announcements:

Finally, here are some other stories or articles I found interesting during the week I want to share with you:

See or hear anything else interesting in mobile.  Let us know by leaving a comment below.

Mobile Market Wrap-up for Sept 4, 2009

With the long weekend approaching, this week has been a little light on major news, announcements or stories in the mobile world, so I decided to keep this week’s update short. 

As expected, Apple was in the news again this week after they approved two new applications that make the Google Voice rejection on-going review puzzling.  This week, Line2 (a Google Voice alternative) released their iPhone app and Vonage (a VoIP provider) received approval for their iPhone app.  Both these apps and their associated services are different than Google Voice, but with all the FCC attention, I just wonder if Apple is laying ground work for a defense.  Also, the skeptic in me can’t help think that Apple is getting a cut of the service fees from Line2 and Vonage where as Google Voice is free… so no ‘incentive’ for Apple.

In other news, Microsoft starts their effort to reenergize their dying mobile business.  This week, HTC and LG announced the first Windows Mobile 6.5 phones along with Microsoft announcing the launch of the Windows Marketplace (their version of the app store) on October 6Yahoo (hmm…bad choice of words), yet another app store goes live! (sarcasm).  I don’t think Microsoft can last in this business with their current me-too strategy, especially since there are three other strong OS alternatives already: BlackBerry, Apple and Android.   I read an article this week that said most WinMo users don’t even know they are using a WinMo phone, so Microsoft does not garner brand loyalty from their mobile OS.  I think Microsoft should abandon the mobile OS and focus on creating an OS-independent ecosystem that helps simplify & bridge desktop computing with mobile computing. 

Here are miscellaneous articles, stories or reports I thought you would enjoy:

Have a great long weekend, and as always, leave a comment below with your favorite mobile stories from the week.

The App Store model is broken

There continues to be lots of media attention and hype surrounding mobile apps. In fact, I can’t sit through one quiet day of Sunday sports without seeing at least a half dozen commercials touting how much better apps make the iPhone. What they are failing to show you is that the App Store model is broken, and not just for the iPhone. While the App Store may have been a good idea when it launched, it has lost its way, despite all of the hype. Where has the App Store gone wrong? Let’s count the ways.

1. The Price of Protection
In order to keep the phone safe from things like viruses, crashing, and resource contention, all the apps in the App Store have to go through a stringent approval process. During this same approval process, content is also reviewed to make sure it is appropriate for the phone. The problem is a very subjective approval process. For example, Google Voice and an app for a book with proceeds going to charity get rejected, yet a “booty-shaking” app is approved. Go figure.

2. A Needle in a Haystack
Think 65,000 apps is a good thing? Then think again. If you release an app, how does anyone find it. This has led to people writing stories on what you have to do to promote your app in order to get noticed. People often put it on their website so one can find it. Hmm, that makes sense – I’ll put the app on my website so people can find and download it. Shouldn’t I just create a mobile website to begin with? At least your mobile website will benefit from any SEO efforts that you use on your online website. For an app, you’re on your own. An app has to have its own promotion strategy since the search engines don’t index the App Stores.

3. Everyone has an iPhone, don’t they?
Based on the hype, you would think that everyone has an iPhone. The answer is that around 3% of the mobile users in the US have an iPhone – that’s how much exposure you get with an iPhone app, provided people can find it AND download it. What? You want to increase the reach of your app? Then you need to redesign it for BlackBerry, Android, Windows Mobile, Palm, Nokia, and Samsung, with more App Stores planned. Or you can design a web-based app once and cover every platform all at once. It’s not hard to figure out which model is more efficient.

4. The Elephant in the Room
Ah, the thing no one wants to talk about: upgrading. What happens when the iPhone gets upgraded? Is Apple testing each of the 65,000 apps to make sure they still work – I don’t think so. What about BlackBerry, Android and Windows Mobile? Yes, the hardware and operating systems of the phones change, and there is no guarantee that your app will still work when it does. Plus, when users change their handset, there is no guarantee that they will redownload your app. Given that the average user upgrade cycle is 18-24 months, there is a pretty good chance that your app will not survive the user upgrade cycle., resulting in a very short-term effect.

So what is one to do. Well, as I’ve discussed before, apps won’t die, but they will get relegated to specialized functions. If I have a cool app that takes advantages of specific features on a particular phone, such as advanced graphics for a game, or shaking to transfer content from one device to another, sure I’d do an app, and I’d even charge for it. On the other hand, if I’m a business trying to promote my brand and product or have an app that does not access to specialized phone resources or features, then I am doing a mobile website, or what I would call a web-app (an application that runs over the web for all mobile phones). Why should I limit myself to one platform, submit to the unknown powers that control its App Store, and risk not surviving the upgrade cycle?

Ultimately, the misgivings of the App Store will cause apps to lose their glow, resulting in a lot less hype. It can’t happen soon enough so I can go back to watching Sunday sports in peace.

The hidden costs of mobile development

This is part 2 of a five-part series covering the issues in the mobile web vs app debate. In this article, I cover the costs of development for the mobile web and apps.

Developing a mobile presence, whether it is for the mobile web or whether it is an app, is not free. There are the obvious costs associated with developing and maintaining a mobile presence, such as paying developers, but there are also other explicit and implicit costs. The four major cost areas can be broken down into creation, release, promotion, and maintenance. Let’s take a look at these costs and see if the mobile web or an app has the advantage.

Creation
Creating a presence for the mobile web or an app requires developers to implement. In the case of the mobile web, the development can be leveraged from an existing web presence, but the site still must be optimized for the mobile environment due to screen sizes and multimedia capabilities on mobile devices. Creating a strong mobile site requires optimization for the numerous handsets that exist. While handset requirements can be bundled or limited to the most popular models, it is still a large task. 

A mobile app also requires development across multiple platforms and operating systems. By developing an app for one platform, such as the iPhone, you risk leaving out and alienating a large segment of your addressable audience. To develop an effective app, you need to develop for at least 5 platforms – iPhone, BlackBerry, Windows Mobile, Palm, and Android – with more app stores either already released or close to launch.

Advantage: A draw. Depending on the complexity, the up front costs of a mobile web presence and an app are very similar.

Release
Releasing your mobile web presence is as easy as releasing a new website. The entire process is under your control. Once you are happy with your design, implementation and content, you are free to release your site.

Mobile apps, on the other hand, require that you release the app into the official store for each platform, if you want the best chance of your app being found. In some cases, such as with the iPhone App Store, the requirements for an app are very strict with respect to content and functionality, and release of the app can sometimes appear to be subjective as documented in our most recent weekly market wrap-up. Additionally, an app has an approval time that requires you to keep the developers engaged longer in case changes are required. The iPhone app approval process, for example, can take up to four weeks, or more!

Advantage: Mobile web. There are no secret gates or controls to release a presence on the mobile web, an app on the other hand has variable, and sometimes costly, explicit and implicit costs.

Promotion
Both the mobile web and an app require spending time and money on promotion to get noticed. When developing for the mobile web, there are ways you can significantly reduce your promotion cost. For example, by implementing code on your website that directs mobile requests to your mobile web presence, you use the same web address for both your mobile web and internet presence. Using the same address lowers your promotion cost over the long-term since every time you promote your internet presence, you gain the benefit of promoting your mobile presence and vice-versa.

An app requires its own promotion program that has very little leverage, especially given how crowded places like the iPhone App Store have become. Relying on ratings and reviews in the App Store is not advised either, as others have pointed out. Even if your initial promotion is successful at generating hype and downloads, you will need to keep spending time and money on promoting the app, across all the various stores, to keep it in front of people. Otherwise, you risk significantly reducing the return on the up front investment in the development of the app.

Advantage: Mobile web. While the explicit costs of initial promotion are identical, the mobile web wins in the long-term because of the implicit cost savings you get by leveraging the promotion of your existing website.

Maintenance
Updating content, changing messaging, or changing functionality on the mobile web is the same as updating your website. The changes can be done quickly and released immediately, with the whole process under your control. While an app has similar maintenance costs, re-releasing an app to the app stores is not a slam dunk. You have to wait for your app to be approved, and there is no guarantee that functionality and content changes will be approved.

Advantage: Mobile web. There is not much difference in explicit maintenance costs, but the implicit costs associated with releasing changes in a timely, guaranteed manner give the advantage to the mobile web.

Flexibility
Okay, so I am cheating by inserting a fifth area. Flexibility, though, cannot be overlooked. With an app, you need to develop in all or nothing fashion. The app has to contain all of the functionality and messaging you want, otherwise, you need to re-release the app and hope that users will download the latest version. The mobile web, on the other hand, can be released in stages and evolve over time. It gives you the flexibility to grow over time in both functionality and messaging. Last but not least, you have the peace of mind that your mobile presence will not be removed if it is determined that your app suddenly violates the rules of the app store. Don’t believe it’s possible? Check out what happened to this popular Google Voice iPhone app.

Advantage: Mobile web. The ability to release a mobile presence in stages, grow it over time, fix bugs quickly, have no restrictions on functionality and content, update content as necessary, and have peace of mind are benefits that apps are hard-pressed to match.

While up front costs are not materially different for a mobile web or app development, the long-term costs are much higher for an app than the mobile web. If you are developing a mobile presence for a quick, one-off, boost to your product or brand, an app makes as much sense as a mobile web presence. But if you’re looking to engage customers over a long period of time, evolve your messaging, and grow your mobile presence with your product and brand, then the mobile web is the way to go.

Tomorrow I will look at were the burden lies for things like finding, updating content associated with, and maintaining your mobile presence. Is it the consumer, developer, manufacturer or carrier?

Mobile apps: Why the hype?

This is part 1 of a 5-part series covering the issues in the Mobile web vs. app debate. In this article I discuss reasons why mobile apps are more popular than the mobile web.

In some ways, there isn’t much of a debate today on whether you should develop a mobile app or a mobile website. With Apple heavily promoting the iPhone App Store, and nearly every other manufacturer joining in with their own version, why is there even a debate? In fact, the iPhone App Store has over 50,000 apps and has recorded over 1.5 billion (yes, billion!) downloads. In the marketing and hype realm, apps have won.

However, I would submit the evolution of the internet and web-based computing as a case study as to why mobile apps will falter and mobile web-based apps will win in the long run. In the old PC environment, applications had to be installed and run locally on your machine. Today, the PC has become nothing more than a thin client that is used to run apps that are on the internet. The mobile phone is an even thinner client that your PC, so why are we installing apps on our mobile devices? Apps are winning the battle today for two simple reasons:

Apps solve temporary problems with the mobile internet

In the early days of the internet, connectivity was expensive, speeds were slow, and browsers were primarily text-based. People talked about internet-based apps and e-commerce, but they were dreams at best given the technological problems. As the problems with the early internet faded, applications on the web became a reality. Web-based apps started slowly with applications such as e-mail but have migrated to all kinds of apps today including office productivity suites, CRM tools, multimedia editing programs, games and more.

Today’s mobile internet suffers from the same problems as the early internet, but these problems are rapidly being addressed. The cost of connecting to the mobile internet is still high, but it gets cheaper every year as carriers compete for customers. Carriers are working on releasing new 4G networks that will offer further improvements in speed. Many companies are working on improved browsing technology for the mobile environment that will allow more functionality and multimedia on mobile websites. Within the next 2-3 years, the problems that apps are solving with the mobile internet will pass allowing for improved access and increased functionality from mobile web-based applications.

Manufacturers use apps to differentiate their hardware

When the PC first hit the market, there were many players and many operating systems. IBM, Apple, Commodore, Atari, Radio Shack and others had personal computer offerings. These manufacturers differentiated their machines based on the applications that were available to run on them. The machines that had the best applications resulted in the best sales. When IBM, Microsoft and Intel worked together to create an open system for developers to create applications, their model created the dominant force in the PC market.

With the emergence of the internet, the apps that your PC runs are no longer that important, so long as you can connect to the internet. What has become important when buying a PC are things like cost, ease of use, color, battery life, portability, and reliability. As a case in point, Apple has improved their PC market share by focusing on these issues, not by making more apps for the computer.

In today’s mobile market, handset manufacturers are following the old application model to grab market share and spending way too much time and effort on apps. As issues with the mobile internet disappear, the handset features will dominate, just as they do in the PC market. Companies that are listening to consumer needs and innovating in these areas over the long-term will win.

 

There are a lot of lessons from the PC market and the emergence of the internet that can be applied to the mobile market. Both manufacturers and consumers need to be careful not to get fooled by today’s marketing hype surrounding apps and recognize that just as web-based apps now dominate the PC environment, mobile web-based apps are the way of the future.

Tomorrow, part two of the mobile web vs app series looks at the true costs of developing applications for the mobile environment.