Is the iPhone Platform Destined to Disrupt the Packaged Software Industry?
A recent report by mobile app/game ad network Greystripe confirms what a lot of iPhone/iPod touch owners already know — namely, that the lifespan of a typical iPhone app is short, real short. In fact, the average iPhone App is used a mere 20 times before it’s sent out to pasture. In restaurant-speak, Apple has cornered the market on “fast food” (and by inference, short-order cooks), but has yet to find the model that drives fine chefs to create white tablecloth, extended dining experiences.
It’s what led me to assert in my analysis of Apple’s quarterly earnings call last week (using a different metaphor) that, “Apple needs to segment its approach between how it works with ‘99 Cents Only’ types of developers versus how it works with ‘Nordstroms’ type of developers.”
Why? When the marketplace only rewards app builders that feed short attention spans, I believe that you end up with two things:
1. A Dearth of Game-Changing Apps. The analog for “game-changing” is what desktop publishing was to the Mac; namely, an application that essentially defines the unique essence of the platform going forward. History suggests that, relative to their disposable app counterparts, apps that aim to be transformational will require both more R&D and marketing dollars — not to mention a gestational cycle — to make their mark. Why bother if a short lifespan tilt will limit the potential ROI on such efforts, in addition to creating significant discovery challenges (for the app creator) within the App Store?
2. Thousands of Tiny, Independent Software Vendors, But No Billion-Dollar Companies. I believe that a core driver of Microsoft’s success was that its platform created legions of both small startups and global mega-companies, a testament to the potency of their developer engagement model. But how exactly do you build a billion-dollar business in an ecosystem proliferated by short lifespan products?
Then again, maybe that’s the point. Google got to where it is today by empowering the digital media upstart to kill incumbent print media via SEM (and making Google really flush in the process). Amazon has certainly done its share to send the traditional big-box retailer into the witness protection program via the Long Tail (making Amazon really flush in the process, too).
Maybe a short attention span as empowered by the iPhone platform is destined to be the great disruptor of the traditional packaged software developer by tiny ISVs — making Apple really flush in the process.
Mark Sigal is a digital media and Internet platform entrepreneur who has worked on eight startups, four of them as a co-founder.
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I completely agree. Apple is having trouble dealing with approvals and the stream of apps that are coming in – which is making the production of expensive apps a risky proposition. A two (or even three) tiered system for approvals is logical and necessary at this point for any sort of high-capital apps to appear.
Additionally, if you run the numbers, you’re never going to make a billion dollar company out of iPhone development – personally, I have my doubts about even making a company large enough for VC investment. If you look at the numbesr, the best apps get about 20% penetration – over (at most) 35 million devices. That’s 7 million or so users tops, each giving you roughly a dollar (less for ads). Is someone doing this math differently to rationalize giving iPhone app companies millions of dollars? I don’t see the exits or the earnings materializing – but i’d love to know what other people think.
Step back and see the forest, my friend. Apple is the “game changer,” and AppStore developers are just riding the coattails, for the most part.
Then again, Hulu is allegedly in the process of developing an app which could change TV/Entertainment profoundly, and Google already has its Maps and YouTube integrated into the OS. Facebook’s app allows instant image upload.
So the iPhone is unlikely to launch massive enterprises, but it is certainly a powerful platform for already established companies.
What I really want to see though is video recording and YouTube uploading in the iPhone. That would be pretty sweet.
@Michael, you couldn’t be more right and wrong at the same time. Yes, iPhone is absolutely a game changer. I have written no less than 30 articles analyzing the platform so you are preaching to the choir.
At the same time, platform plays are made by developers. He who wins the hearts and minds of developers wins the platform game, plain and simple.
Apple is obviously doing incredibly well in that regard. If interested, check out my analysis of the upcoming iPhone OS 3.0 release:
ANALYSIS – iPhone 3.0 Developer Preview: Block the Kick Strategy
(http://bit.ly/ANdMz)
My point, though, is that half the developer story is enabling 1-5 person shops to launch credible apps that make for a nice “lifestyle business.” The other half, though, which Microsoft did very well with in their day, is creating the right type of structure/environment for large companies to mushroom out of this same soil.
It remains to be seen what Apple’s goals are there, but the net effect (so far) is there for all to see, which is the point of my post.
Re your coattails talk, it is wrong perspective (IMHO) for the simple reason that a successful platform is a by-product of enlightened self-interest between the creator of the platform and its developer base. No developers and no 1B downloads. No developers and no 35K apps for the platform.
That’s the battle that RIM, Google (with Android) and Palm (with Pre) all must confront and overcome, which is a by-product of Apple offering superior goodness to developers (tools to create apps, built-in distribution path, 100% reach, large installed base, relatively friction-free monetize-ation).
But it’s not like the developers are showing up at a party they are uninvited too, eating the host’s food and drinking their booze. It’s very much a pot luck deal!
Cheers,
Mark
>>History suggests that, relative to their disposable app counterparts, apps that aim to be transformational will require both more R&D and marketing dollars.
Couldn’t agree more. We have launched an application yesterday (although for S60 but comment is valid for iPhone as well) and we know how much time and effort we have put in to this app. But we no regret for time and effort we put in and we are confident that this may be a game changing app. For the first time a caller tune service provided by service provider on monthly price basis till yesterday is now can be enjoyed with a software application. Check it on http://www.ritsoft.com/index.php?option=com_content&task=view&id=13&Itemid=27
Or drop me an email (vipin.kumar@ritsoft.com) for license if you intend to review it for full features. Note that it has integrated answering machine for voice mail (another service provided by operator) and call blocker.
Mark:
Are you actually a iPhone developer? I’ve had your blog in my feed for quite some time, and after reading your blog postings relating to that of the iPhone I don’t recall any mention of you developing for them. Forgive me if that’s wrong. I mean that sincerely.
Your assertion that the company who wins the hearts & minds of the developer win the game is WRONG. It’s the company who wins the hearts & minds of the consumer who wins the game. The developers will follow. I am an iPhone developer. Dealing with Apple is a pain. The waiting (without any status update) for your app to be approved is annoying. Their iTunes connect interface makes you think they spent all of their R&D on their consumer products and forgot about their developers. Apple treats its developers like crap. However, Apple has developed a superior product for the consumer. They make it extremely easy for developers to get paid. They have a large install base. That’s what matters, and that’s what will cause many developers to put up with Apple.
Will Apple win the platform game? That remains to be seen.
-JP
Yes.
We are very nearly out of cash because Apple can’t approve an application for several months. We have created more and are submitting them, but to no avail. Nothing from the lord of the terroir! I really hope another vendor comes along and creates the necessary infrastructure and user engagement. Apple is not going to change. Ask their music distributors.
Our product is a totally custom templated Kyte or Mobile Roadie like model which allows for embedding. We are creating album experiences for labels. Tell me that this is wrong or undesirable. Perhaps Apple wants to get into that business next.
Even we should admit the incredible success of the brand apple and the apple store model, I do not believe “mobility” based on device applications will be the succesful in the mid-long term.
Mobility capabilities may not be depending on owning high tier devices, mobile services must be based on common features, “the entry doors to the services should be common” and “be should be present even in mid-low tier devices” as a way to boost mobile services to their maximun potential.
We should learn from internet….after a decade of increasing HW complexity, storage, etc…now it seems a 9-10″ inches netbook with 32 MB of SSD, 1 MB RAM and the browser in enough to run the 95% of use cases needed via browser.
Huh guys, the report is about free apps. From the linked WSJ blog: “Greystripe, an ad network for mobile applications and games, has a new report showing how consumers are using free iPhone applications. Among the interesting findings: People use free apps an average of 20 times before getting bored and looking for something else.”
Are the findings applicable to any iPhone app? I have a hard time believing that a paid app is used a mere 20 times.
@ Matt, thanks for the note. Your experiences seem to dovetail (in different ways) Vipin and JPs comments.
@ JP, to be clear, when you say DEVELOPER, do I write code, no. That said, I am directly involved with two companies that have products targeted at iPhone (one is native app, other has optimized web app), and am incubating a third. And of course, I know a bunch of iPhone developers as well so I soundboard my experience against theirs. Finally, of the eight startups that I have done, four of them have been platform companies, and I (read: the team that I was part of) have built a ton of shipping products. That said, your opinion/experience is your own. We disagree on the integral-ness of developer’s embrace of a good platform, although you are certainly right that a golden platform with no users won’t attract developers.
@ Adam, you are right in parsing the focus of the report but if you cross-compare the data in the report with Pinch Media analytics data in the slide show at the bottom of that post (see slides 12, 13, 15), it becomes clear that while paid has a bit more “legs,” it’s still pretty closely correlated with the drop off on free apps. Is your experience materially different as a user? If applicable, as a developer?
Neither. I was just asking, I’m observing that strange iPhone phenomenon from the sidelines and it’s difficult to make sense of it all.
My take on this is how many apps, those for the desktop, did anyone of you downloaded and used constantly. Let’s get real, there are apps we use everyday and there are apps we stop or forgot because they are of little use, we downloaded them because we thought they are useful.
The AppsStore is 2 years old and how many years did those great apps for the desktop take to grow their developers into mighty companies. It takes time and the iPhone platform is in it nascent age
Let’s see what happen in 5 years times when the iPhone becomes a matured platform.
Mark, can you give us the names of the apps that you had developed?