Creators should take long view of mobile app success

Apple Inc.’s App Store features 70,000 applications for download. How can individual app developers stand out in such a big crowd? According to a researcher at the MaRS Centre in Toronto, patience is the name of the game. “The benefit of thinking long-term and releasing new content on a fixed schedule is to discourage get-rich-quick thinking,” says Tim Tang, a market intelligence researcher at MaRS, a non-profit organization connecting scientists, technologists and entrepreneurs. “Hopefully this would put technical-savvy developers in a more business frame of mind.” In an analysis of the App Store, Tang discovered that the average price per app is US$2.47 – and it could be dropping, because there are so many free applications on offer. It may not sound very lucrative, but as Tang notes, some app creators have struck it rich. He points to iShoot, a tank-combat game that propelled developer Ethan Nicholas to revenues near US$800,000, allowing him to quit his day job. Here’s the caveat: “This is, of course, not representative of the 70,000 apps in store,” Tang says. “If it were, the App Store would have facilitated US$160 billion in sales transactions, vastly more than the GDP of New Zealand.” “Most App Store consumers only visit the Top 100 list,” Tang says. “This means 98% of the apps, or 68,000, are mostly invisible.” So how do the winners stand out? According to Tang, creators need to think long-term about renewal revenue for the get-go, and design applications as delivery platforms for new content on a fixed-release schedule. It’s an idea he borrowed from Dr. Randy Pausch (1960-2008), a computer science professor at Carnegie Mellon University who, in his famous final lecture delivered in 2007, posited that success often comes from secondary tasks – not from winning a soccer game, for instance, but from learning team work through soccer. Tang applies that concept to the mobile app market: creators need to develop applications that pave the way for future revenue streams, inasmuch as they entice users initially with catchy graphics and compelling tasks. Tang also suggests designing for social, outgoing, inter-connected consumers. These extraverts tend to have bigger budgets for mobile software, and they’re willing to try new applications. Alykhan Jetha is the CEO of Marketcircle Inc., a Toronto development house focused on Apple products. His company offers Daylite Touch through the App Store. Daylite Touch is a free iPhone-based companion app for Marketcircle’s Daylite business collaboration solution. For Jetha, success in the App Store has less to do with getting more people to download the iPhone software, and more with getting them to buy Daylite server licences. From his point of view, App Store success stories result from business thinking. “The App Store itself is not a marketing mechanism. It’s a distribution mechanism. You still have to drive awareness through traditional marketing.” Joe Shomphe is the founder of Pindropper.com, an application development firm in San Marcos, CA. His App Store offering, PicCard, sells for 99 cents and lets users turn photos taken on their iPhones into postcards mailed to friends and family. This isn’t his main money maker, however – Shomphe works at an insurance company as well. For him, App Store success meant being able to cover his Web site hosting costs and any other Pindropper.com expenses. By this measure, he’s profitable. “I say in terms of revenue I’ve made between $500 and $1,000,” Shomphe says. It isn’t exactly wealth – but for Shomphe, the dollar signs only tell one part of the story. He also notes that that App Store and similar services for other platforms, (Symbian, BlackBerry, et cetera) have changed the game for developers. Whereas they used to face substantial start-up and distribution costs, now distribution is relatively inexpensive, and operating costs have been reduced to nearly zero thanks to free online business applications like Google Inc.’s Web software. “I wouldn’t have been able to do this at any other time,” Shomphe says, explaining that as a single-person development house, Pindropper.com wouldn’t have made enough money to survive in the past.

Creators should take long view of mobile app success

Broadcast | July 28, 2009

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