GigaOM » App Store

Where new opportunity lies in the mobile operating system space

Wed, 22 May 2013 06:55:09 +0000

Roughly half a dozen new mobile operating systems will come to market over the next 6 to 12 months. Many of these look to be more sophisticated than the older ones controlled by Apple and Google. This report will examine the most noteworthy of these new operating systems, Blackberry 10, Firefox, Tizen, and others. It will also document their competitive advantages and disadvantages and gauge what their chances of success — or even true disruption — might be.

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Apple’s app store hits 50 billion downloads

Eliza Kern — Wed, 15 May 2013 22:12:19 +0000

Apple announced Wednesday that the App Store has hit 50 billion app downloads, a singificant milestone for the company only a few months after it announced 40 billion downloads back in January.

Apple’s App Store downloads and downloads from the Google Play store became roughly even last fall, as Erica Ogg wrote recently, and then in the first quarter of 2013, Google pulled ahead in sheer number of mobile app downloads worldwide. However, Apple got 74 cents for every dollar spent on apps during the that quarter, according to a report by Canalys published in April, and the 50 billion downloads now puts Apple back with a slight lead.

The company announced the number of downloads on the first day of Google’s I/O conference, as Google announced that its Google Play store has seen 48 billion app downloads since launch in late 2008. However, it’s good to remember that app downloads only tell part of the story — someone could download an app and never use it again.

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iTunes’ recent growth shows content could be a big business for Apple

Erica Ogg — Mon, 13 May 2013 16:20:28 +0000

For a nice visual aid of how Apple’s iTunes content business is doing, the Asymco blog has done a great job chart-ifying the company’s most recent earnings results.

The charts show how iTunes content revenue has been steadily growing upward and to the right. But they also show that Apple saw an increase in iTunes net sales by $300 million just from the holiday quarter (when Apple always sees its biggest concentrated pop in downloads) to the March quarter, making $2.4 billion in sales. This is also up from $1.9 billion during the same quarter a year ago.

Relatively, this is still very tiny compared to the $23 billion in net sales Apple derived from its most essential business, the iPhone. And to the $8.7 billion from the iPad last quarter. But iTunes alone is close to half of Mac net sales, which were $5.4 billion.

The reason for the increase is mostly due to Apple’s steady expansion of the iTunes Store to new countries around the world in recent quarters. iTunes Music sells in 119 countries, videos in 109 countries, while the App Store and iBookstore are both in 155 countries.

According to Asymco’s calculations, this wider availability in the store has driven up the amount the average user is paying Apple for content:

In March Apple reported that they have 500 million iTunes [users] so one way to think about the iTunes business is to say that iTunes users purchase content and services at the rate of about $40 per year.

This is really interesting in the context of the long-rumored Apple video subscription deal and the still-being-hashed-out “iRadio” service for subscription music content. Imagine if just in just some of those countries Apple introduced a $10 per month streaming solution. So instead of $40 per year from a user, Apple started getting more like $120 per year. And that would be just music. If there was a separate video package some day that figure would get even larger. Plus, that doesn’t include money spent on and within both Apple’s own iOS and Mac apps and third-party apps.

iTunes has always been more of a bonus source of revenue than a meaningful contributor to Apple’s bottom line — the songs were originally there to sell iPods, in the way mobile apps are there to sell iOS devices. But software and services — from iCloud and Maps to Siri — have begun to play a more prominent role at Apple, and in its customers’ experiences. A subscription service of digital content, if deployed and priced correctly, could actually turn into a meaningful new source of revenue for Apple.

If current trends continue, with software and content sales going up and laptop and desktop sales dropping off, it’s not impossible that Apple’s content business could someday soon outpace the Mac segment as its third-largest business.

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Mobile first-quarter 2013: analysis and outlook

Wed, 10 Apr 2013 06:55:19 +0000

The mobile platform wars escalated once again in the first quarter of 2012 as BlackBerry finally took the wraps off its much-anticipated new operating system. Meanwhile Android continued to build on its dominance both worldwide and in the U.S., cementing a two-horse race with Apple.

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Why telcos may finally be moving past app store envy

David Meyer — Wed, 06 Mar 2013 16:35:20 +0000

Remember the early days of mobile content, before the iPhone, when you’d fire up your mobile browser and see your operator’s “portal”? Those portals are still around, incredibly, but not for much longer.

Juniper Research has just put out a report about mobile content business models and, according to the UK analyst firm, just 6 percent of content downloads now come from these portals, with the rest being attributable to third-party stores, chiefly Apple’s App Store and Google’s Play store. Frankly the 6 percent figure is surprisingly high – report author Windsor Holden told me the portals in question belong to “China Mobile and two or three others”, and even those are “going to wither away over the next few years”.

And the real money isn’t even in app sales, as Holden explained:

“Only a small proportion of apps are monetized at the point of sale. On the App Store it’s at the 10 percent mark, and it’s around 3 percent on Google Play. Where the apps are really making money is in terms of in-app payments and in-app billing. If you look at the highest-grossing apps… none of them are predicated on the pay-for-download model.”

In selling all those virtual swords and poker chips, the standard developer-OS vendor split is 70-30, meaning the carrier needs to try to wrangle some share out of that 30 percent cut. Is that just wishful thinking on the operators’ part? Not necessarily.

What carriers have to offer

According to Holden, there is still a problem that needs to be solved if even more money is going to be made out of mobile apps: in order to buy apps and make in-app purchases, the customer needs to register a bank card. And who doesn’t have one of those? Kids, and a heck of a lot of people in developing countries – in these segments, the ability to buy content with pre-paid phone credit makes a whole lot of sense.

“While operators have never been the best at direct content sales, there is a growing opportunity for operators to monetize their assets,” he said. “On a number of storefronts, including those for Nokia and BlackBerry, the conversion rates when you add carrier billing go up by a factor of 5 or 6 – there’s significant uplift on second or third purchases.”

In the U.S., customers of operators such as Sprint and Verizon can do this for Android apps, and Holden reckons around 15 percent of such transactions take place through carrier billing in that country. Globally, Juniper expects carrier billing-derived mobile content revenues to soar from $2 billion to $13 billion between now and 2017.

Of course, iOS is not part of this party, as Apple doesn’t share like that. However, Holden said, the flow of second-hand iOS devices into developing nations may eventually mean Cupertino is missing out on an opportunity — would it rather share revenues, or not make any?

Welcome evolution

This shift towards giving operators a slice of the pie is, in my opinion, a good thing – not because the operators deserve it by virtue of existing (a stance they’ve taken many times before), but because it rewards them for the use of assets that only they can provide.

We can see an analogy in the slow but steady emergence of carrier apps that exploit the good old mobile phone number. In that case, the operator’s asset is its ability to manage identity — my colleague Kevin Fitchard reported just the other day on an interesting new carrier initiative called OneAPI that shows how serious they are about expanding this role. In the case of app and content sales, the carrier can capitalize on the existing billing relationship it has with its customer — this makes the smartphone game more lucrative for the carrier while making life easier for the customer (see also: carriers getting a cut of Skype credit sales).

Recent years have involved so much struggle on the part of the operators against newer, more nimble players in the mobile value chain, but carriers are starting to find a comfortable and rewarding new position in that chain. In time, this evolution of their role may reshape the mobile ecosystem yet again.

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Where the next-generation console fits in today’s video game market

Mon, 04 Mar 2013 18:13:31 +0000

The console era is over — or so a growing number of game-industry executives would have us believe. While social and mobile gaming have taken a sizable share of the video games market, there is room for growth for hardware, particularly in streaming technology and the emergence of open-source platforms.

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Apple probably isn’t cracking down on native app cookie tracking — yet

Erica Ogg — Tue, 26 Feb 2013 23:59:08 +0000

After some iOS apps using HTML5 first-party cookies as a way of tracking users were rejected during Apple’s app review process, a recent report declared the move was the beginning of a broader policy push to get developers, publishers and advertisers to start using Apple’s Advertising Identifier. But that might not be the case.

The apps in question were rejected by App Store reviewers because of a user interface problem, not expressly because of the use of HTML5 cookies in apps, according to a source familiar with the situation. And there is no change in Apple’s policy, no new enforcement and “no crackdown” on cookie tracking at all, this source said.

Techcrunch reported on Monday that the rejections “signaled a push to its own identifier technology” and compared this move to how Apple began enforcing the move away from unique device identifiers (UDIDs) in late 2011. That was when Apple began to reject some apps that were using UDIDs, which are an anonymized number connected to an iOS device that publishers and advertisers could use to track user behavior and better target ads to those users. But UDIDs weren’t as anonymous or private as people thought; with just a bit more information like the user’s birthdate, gender or email address, which some apps were tracking, his or her location and identity could be resolved.

That’s why in September 2012 Apple introduced the Advertising Identifier, which let users have more privacy and gave them more control over what publishers and advertisers know about their use of apps. But Apple, so far anyway, is not forcing anyone to use it.

There are a handful of different tracking methods in use right now, said Craig Palli, vice president of business development at mobile app marketing company Fiksu. UDID has been officially phased out by Apple and few apps continue to use it, but there are five or six other methods also in use, including cookie tracking and the use of MAC addresses.

The apps in question (which have not been officially named and which sources were unwilling to relay) were rejected over clause 10.6 in the App Store guidelines, I’m told. That rule (rather vaguely) states, “If your user interface is complex or less than very good, it may be rejected.” These apps, once launched, briefly kick a user over to mobile Safari before bringing them back to the app — in other words, an experience that is not Apple’s ideal user interface for a native app. The company has “always rejected” apps that do that, this source said.

It is very possible that Apple will eventually want to move all apps over to the Advertising Identifier. But whatever is happening now isn’t really comparable — at least yet — to what happened with UDIDs, according to the source. Developers have not been told specifically by Apple to either use Advertising Identifier or not use other tracking methods like cookie tracking they way they were told in 2012 to stop using UDIDs.

Apple did not comment on whether the company would begin enforcing use of Advertising Identifier.

Palli, who is also quoted in the original story, notes that he personally knows of 10 apps — which he did not name — that use cookie tracking and were approved by Apple in the last month. “Some very large brands have been rejected, but those [app] rejections are not pervasive across the ecosystem,” he noted. In other words, there’s no real pattern yet in the rejections, perhaps other than a user interface rule violation.

Thumbnail image courtesy Shutterstock user Cienpies Design.

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Comcast launches app store for biz customers

Stacey Higginbotham — Wed, 20 Feb 2013 18:14:32 +0000

Comcast opened Upware, an app store featuring nine services for its small and mid-sized business customers on Wednesday. The app store isn’t a new idea, but it’s one that will bring in a new line of revenue for the ISP and serve one of its fastest growing customer bases.

Comcast’s business services brought in $2.4 billion in 2012, up 34 percent from the previous year. That’s only 6 percent of the company’s cable sales, but it’s growing at almost 6 times the pace of total sales. And those customers were asking Comcast for choices on document storage, security and other resources, which led to the ISP building Upware.

While spokesman Charlie Douglas declined to give specific financial details associated with the app store, he did say it would be a revenue-generating service for Comcast. It will also be great for the partners who will have their services listed for Comcast’s business customers. Those companies so far include:

Data Backup – Carbonite, DigitalSafe and Mozy.
Data Security – Norton and Websense.
Collaboration – Box, Microsoft, Soonr and YouSendIt (see disclosure.)

This is a good example of how a service provider can add value for its end users — value that it can monetize beyond a monthly broadband fee. Comcast has been pretty aggressive about adding connected home products on the residential side as well as beefing up it’s pay TV service to compete more with web-based on-demand services.

Disclosure: YouSendIt is backed by Alloy Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media.

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Does Vine get a free pass from Apple due to Twitter partnership?

Erica Ogg — Mon, 28 Jan 2013 16:01:23 +0000

Apple’s role as moralistic gatekeeper of its App Store is well known: co-founder Steve Jobs famously called it Apple’s “moral responsibility to keep porn off the iPhone.” And when it comes to third-party apps that violate App Store rules of this nature, like making it easy to search for any pornographic content, Apple is pretty quick to take those apps down. We saw this just last week with the high-profile example of 500px. But it’s not clear how consistently Apple is willing to enforce those rules when one of those apps in violation is from a trusted partner company.

Twitter’s recent relaunch of Vine — an app that lets users upload short, looping videos and share them in tweets — has attracted a bunch of attention for the platform’s ability to use the short videos for pornographic content. And there are plenty of examples. See these recent headlines:

So far, Apple has not only let it slide, it featured the new Vine app in the App Store as an Editor’s Choice last Friday. There are plenty of appropriate uses of Vine, and it seems most are using the service without violating Apple’s rules. But the situation Apple is facing with Vine shows the perils of trying to enforce a set of rules that are basically impossible to apply consistently across an App Store of nearly 800,000 apps.

The situation leads raises two questions: How different does Apple treat its partners versus regular developers? And shouldn’t Apple care more about Vine displaying porn, since Twitter is integrated into both iOS and OS X?

I’ve reached out to Apple for comment about Vine and will update this story if I hear back.

Update 2:10 p.m. PT: Apple still hasn’t commented on Vine. However, there have been two developments worth noting: As of Monday afternoon, Twitter started actively censoring Vine searches for pornography and some related terms, as The Verge first reported; and, as noted by Business Insider, Vine is no longer an Editor’s Choice in the iOS App Store.

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Live by the platform, die by the platform: Facebook grabs more control of its data

Eliza Kern — Sat, 26 Jan 2013 00:41:10 +0000

Third party apps are important to the Facebook phenomenon — they keep users inside Facebook’s web no matter where they are. Even beyond the addition of new data, a developer ecosystem establishes Facebook as a platform instead of a service, and provides the attractive possibility for a developer to gain traction and users quite quickly.

But recently, this relationship has hit some bumps in the road. Facebook’s value as a business rests on its social graph and its possession of your data — it’s all the company has to monetize (although monetization through Facebook Credits appears potentially successful too), and it has to protect the value of that data at all costs. The company knows that providing its social graph to developers through an API can make or break another product’s initial success, but it obviously knows it needs to dole out that access very carefully.

Other companies have struggled to define the platform/developer relationship and have had varying degrees of success. Apple tried early on to keep apps out of its App store that might compete with its products, and Twitter cracked down this summer on third-party apps duplicating its products and using its data, even if the goodwill of developers helped make Twitter what it is today. Ultimately, after the FTC began an investigation into the Apple App Store approval policies, the company had to clarify what exactly it was looking for in third-party apps, and what kind of competition it would permit. More recently, it looks like Twitter will mostly cut off access to competitive products and build its own products for the functions it wants to include on the site.

So how does Facebook plan to navigate the relationship, which has come under fire recently? Here’s how they attempted to clarify their stance today:

“Reciprocity and Replicating core functionality: (a) Reciprocity: Facebook Platform enables developers to build personalized, social experiences via the Graph API and related APIs. If you use any Facebook APIs to build personalized or social experiences, you must also enable people to easily share their experiences back with people on Facebook. (b) Replicating core functionality: You may not use Facebook Platform to promote, or to export user data to, a product or service that replicates a core Facebook product or service without our permission.”

What’s confusing about Facebook is that it seemingly encourages developers to build for Facebook in areas like games, but for everyone else, Facebook is making it increasingly harder to tell which apps are okay and which count as competition. The new regulations say that you can only use Facebook data if you don’t compete with the company’s core functions; presumably games like Words with Friends or exercise apps like Nike+, which seem outside of Facebook’s focus right now. The other part to the regulations is that you must make the data created in your app easily shareable with with Facebook (a.k.a., to clutter your friends newsfeeds, generate more data, and drive traffic back to the apps). As AllThingsD’s Mike Isaac wrote, Facebook wants a return on its data investment.

But as Facebook grows larger and gets into a variety of new areas like photo-sharing (Instagram), messaging and voice (Messenger), search (Graph Search), and even disappearing photos (Poke), it’s less clear for businesses that are starting out how they can avoid Facebook, which is still undergoing rapid change in its first year as a public company. Just this month, Facebook blocked the voice-messaging app Voxer (competitive with Messenger) and social search engine Yandex (competitive with Graph Search). As TechCrunch’s Josh Constine pointed out, Snapchat probably thought it was totally cool — until Facebook built Poke in a matter of days. Dalton Caldwell said he got positive feedback from Facebook on the developer platform he built, until they rolled out their own developer platform and tried to shut his down.

At face value, it doesn’t seem like Vine competes with Facebook much, since Facebook doesn’t really have a video product (at least right now). And it’s downright easy to share Vine videos back to Facebook. But it’s clear Facebook and Twitter have a contentious relationship; so it was see ya, Vine.

While the company assured developers in a blog post Friday that most people will have nothing to worry about, building your business on top of a technology platform that you can’t control is always a risk. Sometimes it’s a risk worth taking when you need to get your product off the ground.

But when it’s not even clear what that platform is trying to be? Best of luck to you.

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