Summary:

Open Beats Closed in the App Economy Two major growth areas in technology in 2009 are Facebook and iPhone — not just as consumer phenomena, but as developer ecosystems. Some have called this the “app economy.” When Facebook launched two years ago, the applications were mostly […]

Open Beats Closed in the App Economy

Two major growth areas in technology in 2009 are Facebook and iPhone — not just as consumer phenomena, but as developer ecosystems. Some have called this the “app economy.”

When Facebook launched two years ago, the applications were mostly trivial. But its unprecedented viral marketing power made it possible to capture millions of users almost overnight. Things really took off when Zynga and other free-to-play games added virtual currencies, and developers could monetize the attention they gathered. Facebook had 300 million users, viral adoption, and payments. In just two years, a $1 billion-plus economy was created.

Almost simultaneously, the iPhone App Store skyrocketed. Innovative and scrappy developers discovered how free apps could be monetized with paid upgrades and ads. The iPhone had 50 million users, viral adoption, and payments. The result: a $1 billion-plus economy.

However, an important distinction is that Facebook’s open approach gave it much greater scale, creating several companies with $10 million-plus revenue. Apple, on the other hand, has no such successes due to its focus on a closed, high-end phone.

So what could be the next big ecosystem to emerge? GetJar, possibly.

GetJar is the world’s largest open app store, with over 650 million downloads to date and three times annual growth. The key difference from Apple is that GetJar supports all phones, allowing viral adoption from friend to friend. So while Apple will reach a zenith in market share for its high-end phones, GetJar can reach all phones, including smartphones. GetJar already has the scale and viral growth that app developers need. The missing ingredient will come in early 2010: a payment system with global reach and high conversion.

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