We can thank Apple and Steve Jobs for a lot of things — revolutionizing laptop design and bringing handheld video to music players, for example — but here’s another: helping mobile application developers make more money. As large players like Apple move into the cell phone market with innovations like the iPhone and its App Store, the revenues that mobile app developers can get from consumers and carriers will only grow, noted a panel of executives from mobile application startups at our Mobile 09 conference in San Francisco on Thursday. That’s because while carriers have traditionally controlled the billing relationship with the customer, Apple has brought its own billing relationship with the customer to the table and has been using it to break the stranglehold that carriers have had on the industry.
Mark Curtis, the CEO of Flirtomatic, which sells a mobile dating service, said that when mobile developers can actually get between 5 and 10 percent of the revenues from a mobile application/carrier deal (with the carrier taking the rest), he’ll be “doing handsprings.” Growth of that revenue take will make a “huge difference,” he explained, and will happen as bigger players (like Apple) move into the market. And for mobile application startups, it will mean they can hit profitability that much faster.
Onno Bakker, the chief operating office of eBuddy, a startup that makes a mobile IM application, had a stronger description of Apple’s entrance in the market: “The iPhone was quite a shock for carriers. They’re fighting really hard not to become a bit pipe.” However, he also noted that the carrier’s billing relationship is still very powerful, and eBuddy has had to work very hard to create its own billing relationship with customers.
Mark Jacobstein, CEO of iSkoot, pointed out how the kind of billing relationship that a carrier has with a customer is virtually non-existent in the Internet world, and noted that he spent many years in his early career at a web firm fruitlessly trying to convince users to pay for a web video service. Flirtomatic’s Curtis echoed those sentiments and said that the company’s users are three times more likely to spend money on its mobile version than on its PC/web version.
Further proof of Apple’s influence on the mobile industry can be found with the fact that Verizon and T-Mobile are increasingly looking to align with the developer community and marketing mobile applications, pointed out the panel. And ultimately that means more opportunities for mobile developers to make money. Thanks Steve!