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Summary:

There’s plenty of new innovation in the mobile space, as development has become easier than ever before. But while today’s mobile startups are finding it easier to create and release applications than in the past, VCs said marketing those apps is still a huge issue.

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There’s plenty of new innovation in the mobile application space, as development has become cheaper and easier than ever before. But while today’s mobile startups are finding it easier to create and release applications, venture capitalists on a panel at GigaOM’s Mobilize today said that finding an audience for their apps in an increasingly fragmented market is still a huge issue.

The rise of open platforms for mobile applications — like Apple’s App Store and the Android Marketplace — has brought down the cost and time for developing applications, which Timothy Chang, principal of Norwest Venture Partners, said has led to a lot of fast iteration.

Not just that, but innovations are being developed more cost efficiently than they have in the past. Nowadays a team of two or three developers can create interesting new applications, according to Matt Murphy, partner at Kleiner Perkins Caufield & Byers. But beyond just the human factor in the number of developers it takes to build an app, the cost of infrastructure have been vastly reduced with the introduction of cloud services.

All of that has led to an explosion in the number of mobile apps consumers have to choose from. The problem is that with all those choices, developers are having a harder time distinguishing their products from other apps. Forget development — marketing and distribution are the big stumbling blocks for today’s mobile startups. (GigaOM Pro recently put some of the best practices together in a report.)

“I can’t wait to have someone say, we want to raise $10 million and spend it on customer acquisition,” said Scott Raney, partner at Red Point Ventures. The problem is that the solution for ensuring virality and scale in distribution hasn’t been solved yet.

Distribution is one problem, but it’s not the only one. Developers also have to determine whether they want to develop cross-platform or just for one platform, and if so, which one? Once they choose to develop for another platform, that means taking members of their team off of the core application to develop another. But in many cases there’s still not enough incentive to do so.

“We think it makes sense to invest on one or two platforms and just kill it on those platforms,” said Rob Coneybeer, managing director of Shasta Ventures.

And another big problem: Android apps still don’t have the support for monetization that Apple’s iOS and App Store have. Chang said that developers often have a simple rule for determining whether they should build for a certain application store, which is, “Can you make money on the platform? If you don’t have monetization,” he said, “you won’t see the developers there.”

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  2. The last line says it all for Android –
    “Can you make money on the platform? If you don’t have monetization,” he said, “you won’t see the developers there.”

    Android is certainly a big win for Google from a Search and Ads perspective, but pretty much a scramble for the developers and to the phone manufacturers.

    When you add the Search and some ads revenue from iOS, Google is laughing all the way to the bank !

    1. Google has rolled out Android Marketplace for 20 more countries – that was the latest article I read before reading this one:) Since there are many developers in both companies, and I bet many of them work for themselves as well, I think they understand the problem and are now competing for the markets to let developers sell their products effectively

  3. MyLocator .mobi Friday, October 1, 2010

    “marketing and distribution are the big stumbling blocks for today’s mobile startups.” good statement.

    Our Version:
    “Branding and location are the big stumbling blocks for todays mobile startups.”

  4. Guillermo | Social Media apps Friday, October 1, 2010

    I could not agree more with this post.
    Having the apps noticed is the most difficult part for developers right now.
    We can develop really complex apps in no time, but reaching the customer is becoming more and more difficult.

    1. As a Social Media nerd, I’d love to have a stream of these new apps to review and promote, if I like them. I use android. Just google my name you’ll find me. I’ve got some more ideas too.

  5. As odd as it may sound, especially in the last few months, But Adobe Flash and it’s converter to Native iPhone, seems the onkly viable solution.

    And the fastest in development time. If you’ve got a good developer on hand, once you have your web-based or hybrid (AIR) app going, it should take about a week to convert to iPhone and Android. (and RIM, Samsung, Nokia, etc;)

  6. Taylor Shintz Friday, October 1, 2010

    A big issue with customer acquisition is that they’re being sold on apps they can frankly live without. Solve a real problem for the customer. Selling them on yet another Groupon clone? Really? No wonder why so many potential customers are growing weary. Get creative and pitch them on something that really affects their bottom line and you’ll get your distribution.

    1. Great point. Another tactic when rolling out distribution plans is seeking solutions that intelligently make app recommendations to consumers. In doing so you create value for the consumer as well as the app developer generating a qualified install. This can be accomplished in a variety of ways i.e. in-game offer walls connected to virtual goods. It’s also a great way for apps that already have the user base to monetize their app. Great post!

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