15 Comments

Summary:

Now that RIM, Nokia and Microsoft have new smartphones to challenge Apple and Google, a question of platform investment comes into play. At what point do consumers feel they’ve spent too much on mobile apps for one device to keep them from switching operating systems?

appstore

Over the past three months, Research In Motion, Nokia and Microsoft have all introduced new smartphone operating systems to compete with those from Apple and Google. Each has raised the bar over prior offerings in an effort to keep consumers from turning to the iPhone or the many different Android handsets available. As shown in our reviews of the BlackBerry Torch and the Nokia N8, both have finally become optimized for touchscreens. And while Windows Phone 7 devices won’t ship until next month, the user interface feels less like a copy of Apple’s iOS and more of a refreshing new approach to how a smartphone should be used. So all three new platforms are sure to grab new customers, right? That depends on how much money consumers have invested in apps for their Apple and Google phones.

The iTunes App Store launched in 2008, and since then, it and Google’s Android Market, account for a staggering 7.8 billion mobile app downloads. To be sure, consumers download a far greater number of free apps than paid apps. Our own infographic of Android’s growth, which notably comes at the expense of Nokia, RIM and Microsoft, shows that of the 8 – 9 apps downloaded per month on iOS or Android devices, only 20 percent or fewer are actually paid apps. Even so, a little back-of-the-envelope math shows an estimate of 1.5 billion total paid apps for both Apple and Google devices in the past two years. Such large numbers can yield big returns; earlier this year, Steve Jobs said that Apple payouts to third-party iOS developers have topped $1 billion.

Aside from the high-level numbers of mobile app sales and total developer revenues, however, the concept of investing in a platform is a factor at the individual consumer level too. When I deliberated over a move from an iPhone to a Google Nexus One, for example, two of my decision points centered around apps. First: are the apps that I use and need the most available on Android? And second, is a switch between platforms worth it considering how much money I’d spent on iOS apps prior?

These days, many of the major apps are available across multiple handset operating systems, but some are either found only on the top platforms or take a long time before appearing on others. In my case, I was able to salvage my iOS app investment on both an iPod touch and iPad device. But even if your fave apps are available on a new platform, you typically have to pay a second time around.

While tool sets and support drive decisions on what devices to code for, developers are keenly watching sales figures and momentum. Last month, a Nielsen survey found that the average iPhone user has 40 apps, more than double the 14 apps found on the average BlackBerry device. Given these numbers, why build an app for a BlackBerry instead of offering it to the app-happy Apple crowd?

RIM, Nokia and Microsoft all know that Apple and Google devices have the attention of developers because of this situation, and all three are trying to woo programmers with multi-million dollar contests and enhancements to application stores and tool sets. Over time, that may help bring more high-quality apps to these platforms, as will cross-platform tools such as Nokia’s Qt.

As all three contenders try to curb the iOS and Android “app-slosion” however, the incumbents continue to roll with download after download on a daily basis. As that happens, consumers are investing more in platforms that could make it difficult to walk away from them.

I haven’t seen any studies yet on what the magic investment number is: How much does a consumer spend on apps before deciding to stick with a mobile device platform due to the investment? In light of that, maybe we can start such research now with an informal poll. What’s the limit on smartphone apps before you’d be held back from switching to a new handset platform?

Related content from GigaOM Pro (sub req’d):

  1. Just like in business, a cost also has a ‘write-off’ period associated with it. Otherwise no-one would have bought a Playstation if they already had $200 in ‘apps’ (cartridges) for the Super Nintendo.
    So if I spent $200 in the past month, on apps, no I probably wouldn’t switch platform. If I spent $200 last year, but now my phone’s getting a bit old, I might well buy a different type of new phone and accept that I can’t carry my old apps over with me.

    Share
    1. I agree. The cost is minimal over the phone’s lifespan. A lot of apps are web enabled so the app itself is free and it’s largely irrelevant what platform they’re used on.

      You would have to know specifically the apps that people pay for that tie them to a platform and, frankly, I’m not convinced there are actually any of those except in some specialised circumstances.

      App stores are fundamentally becoming clones of each other. It’s not going to be a differentiating factor for much longer.

      Share
  2. For me it’s not so much how much I spent in total (couple hundred bucks I’m afraid), but how much it would cost me to replace the ‘keepers’ with their counterparts on the new platform. And second, now that many of the iOS apps I bought have found a new home on my iPad I wouldn’t feel as bad leaving the iPhone behind.

    Share
  3. I would switch if a new platform offers me similar functionality and less of a lock-in. It is not so much about the money to repurchase apps, but about time in learning to get things done and investment in a prospering future.

    Share
  4. I think you are looking at this wrong. The previously bought apps are “sunk costs” and shouldn’t be considered in the decision over a new phone. What is important is the opportunity cost: how much will is cost to get the new phone to the level of current phone (which has zero cost). If apps are cheaper on new platform or if many apps aren’t necessary (capabilities built into phone) or if many of the purchased apps turned out to be duds; these are all reasons that just looking at money spent does not directly relate to willingness to switch.

    This is an interesting subject though. If Microsoft wants to attract users of iphones and androids, it needs to remember the cost of switching includes purchases of necessary apps (for that user).

    Share
    1. Interesting point, Aaron. I don’t quite look at the investment as “sunk costs” because one can purchase a newer handset on the same platform and reuse the apps. People do it all the time with iOS upgrades or moving from one Android device to another, for example. In a case like that, my investment is protected in the short term future.

      Share
  5. Adding to Tom W’s comment on game consoles, it’s the must-have apps that drive a switch. I have an iPhone because it was first to market and offers (to me) a great experience for the 18 months or so that I’ll own it.

    I’ve played around with Android phones, and I like them. But I don’t see anything compelling enough to make me switch. What it would take would be the equivalent of ‘Halo’ on the XBox: something so compelling that I couldn’t resist. Or at least so compelling that I would make a trip to the store to use it in person and seriously consider a purchase.

    Share
  6. Usability of the handset and its connectivity to other devices(like a Bluetooth hands free in my car).As soon as device becomes faster and smarter i will change sooner than later.

    Share
  7. The apps’ cost, just like the phone’s, is immaterial compared to the pound of flesh the cellco charges every month in subscriptions and fees.

    The real hindrance to switching is familiarity with a user interface. I tried switching from an iPhone 3GS to an Evo 4G a few months ago and gave up in disgust because Android felt so clunky and unrefined in comparison.

    Share
  8. [...] store operator for one thing. And as consumers purchase a greater number of apps for their device, they’re really investing in a platform, which is another potential barrier to get customers sw… to BlackBerry from iOS or [...]

    Share
  9. [...] app store operator, for one thing. As consumers purchase a greater number of apps for their device, they’re really investing in a platform, which is another potential barrier to get customers switch… to BlackBerry from iOS or [...]

    Share
  10. [...] of the laggard platforms will catch up. Or whether users will continue to buy apps knowing they are locked into a single platform. Or even if apps will continue to win out over the mobile [...]

    Share
  11. [...] their purchase first on the hardware. But the various OS makers know that apps are what keep many consumers tied to a platform and they’re very intent on competing for developer support. The fact that Microsoft had a [...]

    Share
  12. [...] concern should be held by all of the other competing platforms. I’ve argued in the past that as consumers invest more in applications for a specific smartphone platform, the less likely they ar…. That’s a potential hurdle to Microsoft’s new Windows Phone 7 devices, although they [...]

    Share

Comments have been disabled for this post