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Mobile entrepreneur David Bluhm has built several successful mobile companies–including mForma and Medio Systems — thanks in part to very…

Mobile entrepreneur David Bluhm has built several successful mobile companies–including mForma and Medio Systems — thanks in part to very clear business plans, The longer-term mission of his latest venture, Zero260, isn’t quite so clear, though. This week, at CTIA, Zero260 launched three basic photo-sharing apps for the iPhone — PhotoFeedd, TravelFeedd and CarFeedd. As for the next step, the CEO, said: “We aren’t deciding on anything specific. We might do something completely different…We can go down a broad set of paths.”

Call it iPhone blindness. The frenzy over the hit device is encouraging everyone, from entrepreneurs to large media companies and advertisers, to pile into the app business. And it’s not only the iPhone — Microsoft (NSDQ: MSFT), Research In Motion, Nokia (NYSE: NOK) and Google (NSDQ: GOOG) now all have their own app stores, each of which will surely spawn its own set of entrepreneurs. But can all of these app builders and marketers make money? The prevailing thought is no. Currently, the business is in an experimental phase, but eventually there will be a shake-out as some struggle to make money on the platform. As it stands today, it’s appearing like the big brands will be the ones that succeed, while the smaller companies — the people with limited budgets and cachet among consumers — will struggle.

For all the euphoria over the iPhone, Apple (NSDQ: AAPL) has sold only 17 million of the devices worldwide, a sliver of the overall market. Mark Lowenstein, a consultant at Mobile Ecosystem, recently said at a conference that a successful iPhone application is one that’s been downloaded by at least 20 percent of users — but that’s still only 1 percent of the global mobile population. Further caution came from Bango (AIM: BGO), an analytics company, which said that according to its data, the iPhone is the 24th most-popular handset for browsing and buying mobile content on the mobile web — and that companies are targeting it at the expense of the mass market.

John Burry, CEO of Mobui, an iPhone-app developer that works with large media brands like Viacom (NYSE: VIA) and Nickelodeon, says: “The iPhone is the new black. You have to have it in your wardrobe…(But) winning the lottery is not a good business plan. A lot of people, who are trying to strike it big in the app store look at that guy who made $700,000 by coding from his couch. Can that be sustained over two years? It’s a hits-driven model. It takes a lot of capital. It

  1. Wake-up Smell Coffee Wednesday, April 1, 2009

    Yep, it's a bubble and merchandising within the Apple Appstore is challenging :-).

    For all the hype about the mass-market being ignored, let's be clear — it is not! Publishers have been working very hard for many years in these channels and carriers have been working equally hard to make it a pile of crap ;-).

    Right now, content consumption on the iPhone indexes very high, as it does on Bberry and some other platforms. It's also a great platform in terms of the experience it can provide for the user and there's only 1 port to build, not hundreds.

    Whether one publishes on carrier decks or via App storefronts, it's a "hits based business" either way.

    So, you can force the content to the masses or focus your efforts where it matters, just depends on how much leverage you want to bring to the party.

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  2. You're forgetting the iPod Touch. There are 30 million iPhone OS devices out there; all with basically the exact same screen and abilities – it's quite a platform; unlike other mobile OS's which run on a multitude of different phones with a multitude of button, keyboards, and other hardware – (and almost all OS updates are controlled by the carrier)

    I'm also not sure what this means "the iPhone is the 24th most-popular handset for browsing and buying mobile content on the mobile web." Does that mean buying ringtones? Other "mobile" products that are carrier-specific? Because the iphone is blowing away everyone in terms of web usage:

    http://marketshare.hitslink.com/operating-system-market-share.aspx?qprid=8

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  3. Marcos, this is a great point. There are about 30 million iPod Touch users. Probably for games and similar apps, this is a valid point, and those users should be counted. But at the end of the day, it requires Wi-Fi to be connected. What happens when you have more connected features/apps going forward? Will people be in Wi-Fi range enough to be such active/engaged users? Plus, they likely don't carry their Touch with them wherever they go, unlike the phone.
    Just a thought,
    Tricia

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  4. Excellent point about the iPhone Touch – and why I don't own one, but rather an iPhone. – I wouldn't take the iPod everywhere and wouldn't always be near wifi. The always-on internet of the iPhone is perhaps its greatest asset; and clearly apps that hit the internet often are of much more use on the iPhone than an iPod touch.

    So why would someone develop for the iPhone rather than other devices? As I said – consistency of target device – if you write for the IPhone OS … pretty much all those devices have the same features (GPS vs. no GPS, 3G vs. EDGE, granted that's true).

    There may be a subset of developers who would be better off targeting another platform, or other platforms first… but there is also another group of developers who will only target the iPhone – a lot of these are Mac developers – because only the iPhone draws their interest and use due to its design, OS abilities, and interface.

    All this said, there are almost too many apps on the app store and plenty of complaints from independent developers of price-pressure; i.e. they can't sell an app for $1-$2 and live on that. If anything those cheap or free apps that are simple can potentially crowd out a lot of more interesting / complex apps; I think that's the potential biggest problem with the app store.

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  5. Wow, you picked some selective stuff there. Bango measures what? The iPhone goes to the real web, not the mobile web. Anyone looking at Bango's results will laugh.

    Are you interpreting Lowenstein's comments as bad? I would think his comment is good. It means that the app market is still just starting if success is still just 1% attachment.

    Burry's comment is self-serving, isn't it? And, does his comment about the music industry make sense? With all that capital behind the label, it's struggling, right? So, how is that capital helping?

    Clearly, Blum and Sharma don't have the intelligence or skill to come up with a solution do they? Who's gonna hire them?

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  6. The Bango stats come from the month of February when we had 1.1 million unique visitors browsed to mobile websites and buy mobile content and services. The reason why we decided to publishing this data is we have come across brands and businesses who genuinely believe that having an iPhone optimized site is all they need to have a mobile strategy.

    With global penetration of the iPhone at 1% according to Gartner, you can clearly see why a strategy like this is flawed. We wanted to add weight to argument that you are missing out on the mass market if you just focus on the iPhone.

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  7. Wow, Sarah at Bango continues to attempt to obfuscate the enormous impact and mobile marketshare that the iPhone has captured in order to further Bango's own agenda and product.

    How about mentioning a few other statistics like:

    NetApplications in Feb 2009 found that compared to all other mobile platforms, the iPhone had a web browser marketshare of about 66% or 10 times greater than Windows Mobile/WinCE, 10 times greater than Nokia’s Symbian and about 30x larger than RIM Blackberry. No other mobile platform comes close. The iPhone is even thrashing non-mobile platforms such as the Nintendo Wii (36x greater), PS3 (16x greater) etc.

    http://www.appleinsider.com/articles/09/03/01/apple_iphone_controls_over_66_of_all_mobile_web_use.html

    (cont'd next comment)

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  8. (cont'd from previous comment)
    Next is Google’s discovery a little while back that 50 times more searches occur from Apple‘s iPhone than any other mobile handset. Google “thought it was a mistake and made their engineers check the logs again,” said Vic Gundotra, head of Google’s mobile operations:

    http://www.ft.com/cms/s/667f13de-da60-11dc-9bb9-0000779fd2ac.html

    Then there is Admob’s latest figures show the iPhone has grabbed 50% of US mobile web traffic and 33% of worldwide traffic:

    http://www.techcrunch.com/2009/03/24/iphone-now-50-percent-of-smartphone-web-traffic-in-the-us/

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  9. (cont'd from comment above)

    In other words, this is no bubble and you’d be mad not to target the 30 million iPhone and iPod Touch users out there that will very soon have downloaded a BILLION apps, 7 times more programs than the downloads recorded by the entire rest of the mobile market in a year.

    Just like the iPod's dominance of the MP3 player market and iTunes dominance of the digital music market, all signs point to the iPhone and iPod Touch continuing to have a major impact on the mobile app market.

    -Mart

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  10. It is all hype. iPhones do represent a lot of mobile web traffic, but its the same 1% of users over and over.

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