Mobilize 2010: Distribution Is Pain Point for Mobile Apps

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.”

Watch live streaming video from gigaomtv at