Answering the iPhone developer wish list

The iPhone 3.0 software announcement this morning really answered the majority of wish lists in an amazingly comprehensive manner. Most of what is left; camera quality, video, video chat, battery life, is all hardware related. So we can now all look forward to the next Apple announcement in the northern summer when presumably the software will be launched alongside the next generation of iPhone.

The consumer features are getting wide coverage on a large number of sites but lets take a look from our perspective of a business considering entering the App market with consumer or business applications.

The State of the Market
Penetration

• 80 countries (77 now have App Store access)
• 17 million iPhones sold to the end of calendar 2008
• 30 million phones & iPod Touches total. For most apps this is the new addressable number.

In the development market there is remarkable interest with 800,000 SDK Downloads and 50,000 signed developers, 60% of them new to Apple development.

Outcomes
25,000 Apps with 800 million downloads in just eight months. The previously highly ambitious billion download forecast in the first year, now looks like a very modest goal.

From a business perspective there are now new ways to monetize development and improve returns. Strangely upgrading from a Free to a Paid version of an App is not one of them, according to Apple it would have confused the user. If you like the Lite version you need to go back to the App store to buy the full featured version. However charge $0.99 in the first place and you can then start to sell upgrade packs, subscriptions and new content directly within your app.

The In-App purchase method supports periodic memberships or subscriptions to magazines, newspapers or trade information. It allows the purchase of new levels or add on packs in an app. It can be used to unlock downloaded features or premium content or within a reader purchase new books or multimedia content.

The caution is of course the proposition still has to be compelling enough to win an audience. We now have a whole new world of discovery ahead around what the product levers are and how to maneuver them. The recent research by Pinch Media really highlights how few apps most users, use regularly. Get the value proposition wrong with these extra options and you could kill app usage very quickly as well as earn the kinds of reviews that can badly hurt your business.

In terms of the other APIs, there is a social theme to many that Apple announced today. Peer to Peer discovery allows apps to find each other locally and co-operate for multiplayer games or sharing of effort or info. You can even visualize each other’s locations with maps now able to be built into the app

The ability to interact with accessories opens up a whole range of new possibilities. For example with a barcode scanner, collaborative collection and sharing of information and pricing. With data collection instruments, logging and analyzing data in the field as well as transmitting it back to a computer.

The final release of Push Notification was welcome, as was the admission by Apple that they got the scale of what was needed wrong by a massive factor. After the MobileMe launch they were obviously very cautious and have now completely re-architected for scale and interestingly worked with all their carriers to ensure there are no bottlenecks on their networks in pushing the info to customers. I for one am happy to see them back off and fix it well before it became a disaster.

They did touch again on background apps and provided examples of what running one polling app in the background does to standby battery life. This is running the app but with no actual activity on other mobile OS’s. According to their research standby time is reduced by 80% or more. Their push notification still reduces standby time but by a more modest 23%. I still think there is a case for some background apps, for example logging geo locations on a route while using other apps. Hopefully as battery life improves they will enable some mechanism for doing some of these things.

Some of the other features you can now build into your apps are in-app email to mail content directly from you app, access to the iPod media library and use of the proximity sensor. Video streams will now also automatically scale to the connection bandwidth available to a user, so you can now provide high quality video and no longer have to focus on the lowest common denominator.

So now all you need is the next right idea

Is developing iPhone Apps a waste of time?

Pinch Media recently released a presentation they made to the New York iPhone Developers Meetup on Feb 18th. Reaction in some circles would suggest iPhone App development is not worth the time and effort. Yet applying some business basics to the data shared by Pinch suggests otherwise.

I took a look at the presentation at the time and thought it offered some interesting insights, was quite logical and gave some good tips on being successful. And there is one slide (5) that gives a very interest insight into pricing to drive demand that is gold. Take a look if you haven't yet seen it.

iPhone AppStore Secrets - Pinch Media

View more presentations from pinchmedia. (tags: pinch media)

So I’ve watched other blogs cover it over the last week or so and the headlines have ranged from the sky is falling, through a couple that seem to seem to be on the same wave length as my thinking, namely there are no guarantees of success but this is a viable and growing market and you can succeed if the product, pricing and marketing are solid.

(Oh no)

App Store grows, but apps are seldom used (Macworld)

Most iPhone applications gathering dust (CNet)

Apple App Store Downloads Often Abandoned (Infoworld)

Apple App Store grows, but iPhone apps are seldom used (Computerworld)

(more realistic)

Pinch Media Data Shows The Average Shelf Life Of An iPhone App Is Less Than 30 Days (techcrunch)

Why To Charge For Your iPhone App: Ad Revenue Stinks

1. We know the app store now offers a vast choice of apps
2. We know overall usage blows every other mobile platform of the map
3. We know price barriers to downloading and trying apps are low and encourage trial
4. We know from the number of downloads that people are doing just that.

So I am wondering what I am missing that the sky is falling writers are getting?

My iPhone usage is not typical. I use it heavily. But having talked to a number of other users this last week ranging from very light users through to nearly as bad as me, there seems to be a reasonable pattern.

• We all have a small number of core apps we use 2-5 times a week and rely on. How many of core apps seems to be the biggest difference between light, medium and heavy users.
• We have some games that we try once or twice and discard. Some games that we use heavily for a while, then get bored with a move on and one or two we are addicted to (for the moment)
• And a lot of specific situation apps and utilities that we use from once a week to once in a blue moon when the situation calls for it
• and most of us could do with a clean out of stuff we tried and didn’t like.

In my case it looks like of the 103 icons on my phone, 68 are third party apps and the rest Apple installed apps or web bookmarks

Again I am not saying this is typical but it seems to be close to the Pinch data and highly reasonable. It is actually a lot like my everyday use of computer applications. One difference is the "as needed" type applications. On the phone these tend to be one off situational apps eg I need a good meal so I use urbanspoon, I want to identify a song so I use Shazam. On the computer "as needed" use for me tends to be driven by projects, so I might use an app for a week, then not touch it again for 12 months.

The very nature of apps lends them to this very specific tasks, very occasionally model. It does however reinforce the message about not expecting reward from advertising. A developer needs to be paid for the app either by the user or by a company commissioning a branded app as a service for customers.

iPhone still growing in mobile browsing share

Net Applications are now measuring mobile Market Share. According to their first mobile report, the iPhone commanded two thirds of all mobile browsing in February.

Other analysts have previously credited Apple products with high US usage using various methodologies but not this dominant. Net Applications measure web use by device and browser globally for around 160 million users a month. They have become a de-facto industry measure of browser and OS share in web browsing and are undoubtedly hoping to repeat that in mobile.

The other good news for developers is that Android users seem to also be very high internet users given the installed base of the platform.

Although the iPhone has a commanding lead in mobile browsing share, Android and BlackBerry are rapidly gaining market share. This does not mean that iPhone web browsing is shrinking, because the overall market is growing rapidly. Android has garnered over 6% of mobile web browsing since its release in October.

Mobile Browsing by Platform Market Share

February, 2009

Mobile Browsing by Platform

Total Market Share

iPhone

66.44%

Java ME

9.11%

Windows Mobile

6.90%

Android

6.26%

Symbian

6.17%

Palm

2.37%

BlackBerry

2.24%

BREW

0.51%

Report generated Tuesday, March 03, 2009 3:57:39 AM

Holy App Store Batman

500 in July to 10,000 in December took five months. Two months later the number of iPhone apps in the iTunes App Store has doubled to 20,000. We've touched on some the pluses and minuses of such explosive growth before, but its worth looking at some aspects again.

This is unprecedented growth, much faster than the original music store in iTunes and shows an incredible amount of global developer activity. The acceptance of the platform is amazing.

On the downside:

• It presents late entrants with a much greater barrier to getting exposure. Marketing strategies gain more importance everyday.
• It presents users with a real issue in working out what apps are worthwhile. Apple need to continue to improve the tools in the App Store
• It puts continuing pressure on potential earnings for developers

On the upside:

• Downloads appear to be keeping pace and people are actually using apps
• Users are investing emotionally and financially in personalizing their iPhone creating stickiness
• The critical mass of the iPhone platform continues to gather steam making it easier for businesses to justify investing in developing on a single mobile platform for sometime to come.
• The success of the App Store will continue to drive iPhone sales. The size of the market becomes more viable everyday, for collaborative or aggregation type opportunities as well as just selling apps.

Conclusions

Somewhere, sometime, someone will probably say 20,000 apps is enough and there is nothing else left to build ... just before the next killer app is launched. 

The market for iPhone and iPod Touch Apps is maturing. It now requires more traditional business planning, particularly around market sizing, ensuring your investment in development is appropriate for the risk and that you have a strong marketing plan to make sure you stand out.

However the world is always ready for the next great innovation. If you have got "the idea" for the next unique or highly targeted app, it doesn't matter if you are competing with 100,000 there is still room to go for it.

Here's how to become an iPhone Developer in 8 easy steps, or just talk to us.

iPhone the only mobile platform worth developing for!

A couple of new reports on the overwhelming numbers and huge growth of the iPhone software would lead you to that conclusion.

 
Its a mobile world and things change quickly. But at this exact point in time if you are not on the iPhone and you have a general consumer application, you are not where the market is.

In mobile gaming ComScore report 17% growth last year and while 3.8% of phone users have downloaded a game, on the iPhone 32.4% have in 6 months. iPhone users accounted for 14% of all mobile downloads in 2008, bearing in mind the app store was only available for 6 months of that and grew rapidly as the year went on.

Developing for a potential market of millions of other phones is wasted when user behavior dictates that the actual market for not only games but all types of apps is mainly with iPhone users. The complexity of developing for a plethora of other platforms, screen sizes and devices and of dealing with multiple carriers adds huge costs, and for what outcome?

In a great analysis Pete Burrows from Business Week quotes Pelago CEO Jeff Holden

late last year, he crunched the numbers and came to a shocking conclusion: that the 13 million owners of iPhone owners had already downloaded as much software as—are you sitting down—1.1 billion other cell-phone owners

Growth in the last couple of months now has that at 1.6 billion other cell-phone users or 6.4 times the size of the entire U.S. mobile phone market.

That doesn’t mean the App store is perfect, pricing pressure from low quality apps is still restricting developer margins, innovation or quality. But as the market becomes more sophisticated and users more discerning, there is every reason to think that this very competitive market will actually produce a great staircase of innovation vs price options for consumers and still allow business to produce good returns. Another business week article in mid Jan looked at what it called the Apple App Store Monster and contains some big numbers.

Update 4 Feb 2:00 pm. Just came across a Fortune blog on this top with an in-depth app analysis by category. It shows there are now 18,700 Apps available.

IDC confirm 125k Aussie iPhones in first 3 months

In our early posts on the size of the Australian iPhone potential we quoted forecasts from Telsyte.
Sometime in 2011 more Australians will be able to access the Internet with their phone than with a computer
Its not just the iPhone
I have to say sometimes they raised eyebrows but it tuns out they were probably in the ballpark.

ZDnet are today quoting IDC analysis that says 125,000 iphone shipped in Australia in the first 2 and a half months.

If you are thinking about developing iPhone Apps it makes sense to try and do it for a global market. However even products with a purely Australian bent do have a viable market. Maybe forecasts of a next generation smartphone installed base of 2-2.5 million by the end of the year are a little high given events in the real world but the general direction is solid and growing daily.

As we said last year we expect Android based phones and new iPhones will drive demand in the second half of this year. Having apps ready for the spotlight during those launches gives you more opportunity for success. Having locally focused products is another way of getting noticed among 15,000 other apps. If you have an idea that only works in Australia, milk it for what it is worth and don't worry about the market you don't have. Just keep your forecasts realistic.

Apple and Nokia will swap places by 2013

In a week that sees the announcement of another credible smartphone in the Palm Pre and Telstra originated rumours of another Android based iPhone killer from HTC, one research company is predicting Apple will take 40% of the Smartphone Market by 2013. Nokia currently has 40% of the market.

According to a Press Release sent to iPod Observer, Generator Research have just completed a new report that estimates Apple will ship as many as 77 million phones, mainly at the expense of Nokia. Their analysis shows the key driver is that

the iPhone and App Store constitute a vertical platform for the delivery of advanced mobile services.

Back in November in It's more than KISS, I looked at the competitive strengths of the Apple ecosystem and came to the same conclusion.

As Andrew Sheehy from Generator says

Right now, Apple has the best platform and the best-looking forward roadmap

Certainly if you are ready to get into the market, and now is definitely the time to be experimenting with mobile solutions, it is the only viable platform for consumer oriented Apps.