23 Comments

Summary:

Apple’s operating profit growth could take a 30 percent hit by 2015, owing to the rise of HTML5, according to Bernstein Research Analyst Toni Sacconaghi Jr. But industry watchers should be wary of underestimating the continued appeal of the native iOS app for two big reasons.

AppStore-featured

Apple’s operating profit growth could take a 30 percent hit by 2015, owing to the rise of HTML5, according to Bernstein Research analyst Toni Sacconaghi Jr. Forrester Research agrees that HTML5 adoption could also affect Apple’s ability to generate revenue from native apps, according to a PCWorld article on Monday. But industry watchers should be wary of underestimating the continued appeal of the native iOS app for two big reasons.

1. The limits of native apps can quickly change

Part of the argument behind the ability of HTML5 to replace native apps on devices like the iPad and iPhone is that the web tech is catching up in terms of features to iOS software. That may be true, but it will likely never actually reach par with native apps, because Apple is in the driver’s seat when it comes to what third-party software can and can’t do on its devices. Every new major iOS update brings new APIs for developers to play with, and each new hardware generation puts new connectivity options, radios and other hardware features at their disposal. For example, iOS 5 introduces 1,500 new APIs for developers to leverage, including access to iCloud Storage, Newsstand and Twitter.

Only Apple determines what its software can and can’t do and what kind of hardware it gets to work with; with HTML5, standards are set based on what all browsers will support, which requires more compromise. Also, HTML5 will necessarily have far more limited access to the full capabilities of iOS hardware, even though Apple has made some improvements on that side of things, like allowing mobile Safari to tap into larger portions of local device memory and geolocation services. But even if it looks like HTML5 is “catching up” to what’s possible with native apps, it will likely never actually match them, as Apple’s mobile tech evolves and it provides more APIs to native developers through the iOS SDK.

2. Apps have only just begun beating the mobile web

Mobile apps have only just recently started to be more popular than mobile websites for Internet access from smartphones and tablet devices. It’s a trend that has been in motion since the advent of app stores, and there’s little indication that it’s slowing or turning around, despite recent efforts by players like Vudu, Amazon and the Financial Times to create HTML5 web apps instead of going through Apple’s App Store.

It’s obvious that companies would prefer HTML5 over native apps, since web-based products would allow them to cut out Apple as a middleman and take in a larger percent of any profits, as well as make it easier for them to develop once for many platforms. But if studies around consumer mobile desires are any indication, the will on the user end of the spectrum just isn’t there to support an HTML5 mass migration. That may change as more HTML5 products come to market, but the advantages of native apps are still things consumers want: dependable offline access, device-specific interfaces and unfettered access to special hardware and software features.

I think Apple is poised to make more, not less, money from apps in the next few years, and I don’t think HTML5 is really in any position to cut into those profits yet.

  1. App store revenue is a tiny fraction of Apple’s profits.
    Even if 100% of all apps went to HTML5 – it would not make a substantial difference to Apple’s revenues.
    In truth, nothing like that is going to happen. Developers understand that being inside the App store brings many more paying customers than being outside it. 70% of a lot is better than 100% of not very much.

    C.

    Share
  2. Andrei Timoshenko Tuesday, September 13, 2011

    Most importantly, there is no reason for an application to be purely server-side, even if it can recreate identical functionality. Purely server-side applications are less robust (they depend on the functioning of server, client, and network, and any failures become conjoint with other failures – so large ‘blackouts’ become possible), and their main advantage is the optimisation of the use of scarce resources. Naturally, we are moving into a time of an overabundance of computing resources – a supercomputer in every doorknob – and not one of scarcity.

    Of course, using apps over HTML does not mean forsaking connectedness, it just means that connectedness will be more distributed and P2P, rather than centralised and client-server. Redundant meshes are more robust, more flexible and more difficult to monopolise than optimised chains are… It’s the same reason why electricity microgrids are such an excelent idea.

    Any data, therefore, should first be processed and stored as ‘close’ as possible to the device the user is currently interacting with, then predictively pushed out to devices the user may soon switch to, then pulled in for situations not previously predicted, and only as a fallback option accessed from a backup on some centralised server.

    We need the Internet, but more through inter-connected meshes of devices, apps, and APIs, than through browsers, servers, and HTML.

    Share
    1. Hamranhansenhansen Thursday, September 15, 2011

      HTML5 is not server-side, it runs on the client, same as native apps. The server is optional in HTML5, you are not supposed to rely on it being there. The first time the user uses the app, it is installed locally, and from then on, only pulls updates from the server.

      So what you have in iOS is just 2 kinds of local app: native App Store and HTML5 Web app. They are like a yin yang, the 2 together give you a complete universe of apps. The native apps are iOS only, while the Web apps are universal. Native apps are managed, Web apps are open. Native apps are controlled by Apple, Web apps by W3C. Native apps have a commercial installer (App Store) and Web apps have a non-commercial installer (World Wide Web.) Native apps have Mac-like features (animation, multichannel audio, video, ease of use, refinement) and Web apps have Web-like features (minimalist audio, video, animation.)

      Whatever project a developer is working on, one or the other type of app will be ideal, either HTML5 Web app or native App Store. But in both cases, you are making a local app.

      Share
  3. I have to add that, the recent obsession with html 5 comes from the wrong perspective.

    I keep hearing how much easier is to develop web based apps than native ones, one size fits all, all of that.

    But they are talking from the viewpoint of the developer, not the consumer, they are offering what is good for them, not for me. That’s the reason why Apple is so succesful, they put the consumer first, not look what’s better for them and then force consumers to follow.

    Share
  4. It’s a peculiar thesis, given that the rise of the internet, and even the rise of cloud applications, has done little to dent the sales of high-priced software for desktops and laptops. An app resides on your device whether or not you have a viable 3G, Edge or Wireless connection. Naturally apps such as BBC News which have no other function than downloading content from the web will lose ground to HTML5 — but remember that the BBC News app only exists because the current BBC News website exploits Flash and is therefore not fully iOS compatible.

    Altogether, Bernstein’s research and Forrester sounds like another ‘oh no, the future is coming — quick, hide!’ response.

    Share
  5. Jason Thibeault Tuesday, September 13, 2011

    I have to say you are completely missing the point. Like all the news stories lately about this, it’s an “either/or” discussion. The true opportunity is in the middle-ground provided in development environments like Titanium. This enables the developer to utilize powerful, standardized technologies (like HTML 5 + js + css) yet within a native app wrapper giving them total access to the bevy of system-level APIs and functionality. Furthermore, this provides the developer the ability to create truly cross-platform experiences: the same HTML/js/css code in my iOS/Android app can also be used on the web. But the question around native vs. HTML 5 is also about app functionality. Why in the world would an application like the Financial Times need access to core system level features? And if it doesn’t, what’s the point of building a native app? What this whole discussion around native vs. HTML 5 apps has raised is this issue: that your application MAY NOT need to be native. And, as such, that has cracked the walled-garden of Apple’s AppStore because it means developers have a choice.

    @jnthibeault

    Share
    1. Hamranhansenhansen Thursday, September 15, 2011

      There is no walled garden. That is absurd in the extreme. Apple not only put HTML5 in iOS, they did 5 years of WebKit work first and co-writing of HTML5 in order to get it on there. They were the ones who ported the Web to ARM, remember? HTML5 is the most open API ever created. No device that runs HTML5 can be described as a walled garden. Your app can install locally from any server in the world.

      App Store is managed 1) as an anti-malware initiative, the only successful one ever, resulting in a 100% malware-free native app platform, and 2) as an alternative to the unmanaged Web, which all users already have access to. These are great reasons. Arguing with success is for losers.

      It is fine to create an HTML5 app and deploy on the Web and the Java platforms. App Store, though, offers you native C/C++ and the opportunity to make a much richer app than HTML5. Since user’s baseline expectations are set by the Web, App Store enables you to wow them and that is what people are willing to pay for in an app. So if you give your HTML5 app to an Xcode coder and let him use it as a mock-up and then build on it from there, the money you pay that coder will come back to you 10 times over or more in increased sales because your app will be that much better.

      In other words, native iOS app development pays for itself. No reason to avoid it if you want to be in App Store. If an app platform doesn’t pay for itself, then by all means, wrap a Web app.

      Share
  6. Wasn’t this Apple’s intent in the first place? Developers were supposed to write HTML5 web apps to run in Safari. Everybody raised a stink and Apple rolled out a way to write apps with XCode and subsequently created the cash cow that is the app store. So now we come full cycle.

    Share
    1. No. When the iPhone was first introduced you could build web apps for it but HTML 5 was not really more than a concept. Apple always said and always intended there would be apps for the iPhone in later versions of the hardware and iOS.

      Share
      1. Hamranhansenhansen Thursday, September 15, 2011

        Yes, the apps you could write for the original iPhone were HTML5.

        HTML5 was started in 2004 and adopted by W3C in January 2007, 6 months before the original iPhone shipped. A key feature of iPhone Web app development was you had the HTML5 canvas to draw an interface on.

        HTML5 is just a description of modern HTML, it describes what the browsers do, not some lofty future academic goal that we may never achieve. It is not as new as you think, and what little is new is backwards-compatible. The fact that the original iPhone supported less of the HTML5 spec than today’s iPhone did not stop the apps from running or stop them from being HTML5.

        The original iPhone had native apps built with the same tools Apple released a year later. Yes, definitely they were always going to do that. But they were always going to have HTML5 apps as well. They did not make WebKit for OS X so they could leave it out.

        Share
  7. I think you’re completely right – and I don’t even think you have to argue the point. Simply ask yourself this question: If HTML5 was a threat to Apple income, Apple would never have taken such a huge stake on making their devices devoid of flash gambling on the advent of exactly HTML5…

    Share
  8. Apple’s App Store brings in about $300 to $400 million dollars a year. By next year, Apple’s cash reserve will grow about $7 to 8 billion per quarter. I honestly don’t think losing some of that 30% App Store fee is going to hurt Apple at all. Apple has already tried to promote the use of HTML5 on its devices and now this jackass is claiming Apple is going to suffer the most loss of all smartphone platforms. Apple makes most of its money selling hardware and nothing is going to hurt Apple as long as consumers continue to buy Apple products no matter what drives the sales, be it native apps or HTML5 apps.

    Share
  9. First of all these numbers are made up. Nobody has any idea if this will happen. Secondly Apple supports HTML 5 and does not seem to be at all worried about it impacting app sales. Their biggest reason for supporting HTML 5 is to get rid of Flash but they know the HTML 5 or ANY web based app will not compete well with a actual app.

    Share
  10. html5 apps will remove the necessity to download elementary, simple apps. Most of them are free and sometimes paid. This is why this will not alter apple’s position or even the android market. Html5 will not be able to replace the comfort of sophisticated app

    This being said take a look at currency.io and you ll understand that once you used this HTML5 app from your mobile device, you would never pay 0.99 for a currency converter app

    Share
    1. I’ve tried. It’s very slow to start. Needs internet connection (if i’m abroad maybe I don’t have a connection). It’s not smooth as Converter Touch.
      Apps still win

      Share

Comments have been disabled for this post