The term “web app” has been around for the past years – we’ve all heard it and used it more times than we care to remember. Yet there remains a debate on where “web sites” end, and “web apps” begin. Guest author Ciprian Borodescu presents the opinions of several prominent figures in the web technology domain and discusses the ‘app-ification’ of the web. Definitions of web sites vs. apps Web sites are so deeply embedded into our daily culture that it is impossible to imagine life without them. Even as a developer, I find it hard to remember the times from my childhood when my chubby little hands didn’t yet know how to type. In the last two decades, the Internet has grown, expanded, exploded and became impossible to ignore, making any keyboard without an Internet connection pretty much useless. In the last few years, the web brought with it a new term that can be exciting and confusing at the same time: “web app”. But what is a “web app”, how does it differentiate from a “web site” and why does it matter? Understanding this difference ultimately makes us better users or developers? Is a business going to blossom just by marketing its online presence as a “web app” instead of a “web site”? To figure out the boundaries between websites and web apps, I interviewed several prominent figures in the web technology domain who contributed with their experience and professionalism to help guide the debate: Dominique Hazael-Massieux (Mobile Web Initiative Activity Lead at World Wide Web Consortium), James Pearce (Head of Developer Advocacy at Facebook), Michael Mullany (CEO at Sencha), Christian Heilmann (Principal Developer Evangelist – HTML5/Open Web – at Mozilla Corporation) and Stephen Pinches (Head of Learning Technologies – ELT at Pearson plc and Group Product Manager – Mobile & Emerging Platforms at Financial Times). In this article I pieced together their expert input to help answer the web site vs web app debate. The difference between Web sites and Web apps In the pre app store era, the word “applications” had been applied to Web sites that provided advanced user interactions and capabilities previously available only through installable software. Early examples of web applications include Webmail, Google Maps and Google Docs. Compared to the classic web, i.e. blogs and news sites, web apps provided a richer user experience and access to advanced browser capabilities. Today single-page web sites might still be referred to as web apps, but it’s more about the task focus than the technology itself. From this perspective, as Christian Heilmann explains, “The use case of an application is always to DO something with it”. The task centricity of web apps is easier to understand if you think of smartphones or tablets: an app’s purpose is to achieve a specific task, like making a call, checking your email or finding a taxi nearby. Some may argue that we can simply classify Web sites as being read-only and Web apps as being read-write. That certainly seems simple enough: Web sites are for consumption what Web apps are for creation. Does it sound right? For developers, it is easier to draw the line between web sites and web apps if we think of the technical distinctions. Web apps have some defining attributes that bring them closer to their native counterparts: self-contained rich/interactive user interface, possibly mimicking the native UI of the device using advanced device capabilities – like geolocation, camera integration, or other technologies that the W3C Device APIs and Policy Working Group is developing action-oriented rather than information oriented not relying heavily on (or hiding when possible) the browser chrome (back button, reload button, address bar) working off-line, for example using HTML5 ApplicationCache, localStorage, or indexed database Mozilla’s Christian Heilmann argues that the offline attribute is not a technical necessity in terms of definition, but rather a crucial usability distinction: “Seeing how flaky our connections are – I am writing this on a plane – our apps should make people as effective as possible and this means we shouldn’t be dependent on a connection. The interface should be usable whilst we are off the grid and sync as soon as we go online”. But how can we explain the difference to non-technical users? And, do we need to? According to Dominique Hazael-Massieux, a Web site can be presented as a Web app as long as users consume it in a similar way they do a native app. If it’s exposed as an iconified app and used for a specific task, it shouldn’t matter whether it’s contained in the browser or installed via an app store. Facebook’s James Pearce outlined a few possible vectors that need to be considered when differentiating between Web sites and Web apps. I‘ve summed up his arguments: Creation versus Consumption. Pearce asserts that read-only interaction should be classified as a site, but this criteria is not sufficient to distinguish between web sites and web apps. We still have cases like Flipboard (clearly oriented towards consumption) or Twitter and Facebook (with entirely user-generated content) that do not fit in any box. Linkability. Since both web sites and web apps can be launched by entering a URL into a browser or from a home-screen icon, this is clearly “not a reliable way to distinguish between web apps and web sites” according to Pearce. User Experience. Visual pizzazz is an important argument, one that users might particularly relate to, but is also a fuzzy boundary. What if my site displays a fixed toolbar, but no back button? What if my list appears as hyperlinks instead of ‘tappable’ items? What if I use plain scrolling instead of smooth fancy bars? Architecture. In the case of single page webapps, is SEO the price to pay when choosing to give the browser far more autonomy and responsibility and take advantage of its HTML5 APIs like storage? Do Web sites have SEO capabilities while Web apps don’t? We are back to explaining the differences between the two by using technical terms. Should you be building web apps or web sites? This question might be regarded as a technicality with a pinch of marketing to spice it up. This reminds me of the “HTML5 is ready” contest by Sencha that was announced a few months back, encouraging developers to draw inspiration from native apps and create similar web apps that show off the capabilities of HTML5. The creators of the competition correctly argued that “the mobile web is the most fertile ground for leading edge web development because it doesn’t have the legacy of the older internet explorers that the desktop does. You can start your development with the assumption that your app or your content will be used in a fairly recent browser, so you can take advantage of a whole host of features like Canvas, inline SVG, HTML5 video, CSS3 styling etc. that bring the experience alive for the user”, as Sencha’s Michael Mullany explains. Would it be safe to argue in favor of building web apps instead of web sites especially on mobile? Mobile users perform specific tasks on their devices, so a web app that offers the same experience as a specialized native app might gain more interest compared to a regular website. Long term the distinction should not matter. According to FT’s Stephen Pinches, it really doesn’t make any sense, on the long term, to speak about the future of the mobile web: “there shouldn’t be “mobile” and “desktop” but simply good, user-centered design, which adapts and responds to the screen size and features of the device upon which it is displayed. However, on short to medium term, there is a need to differentiate and ensure the user experience is as good as possible on a given device.” The ‘app-ification’ of the Web Whatever your preference may be, there is an increasing number of mobile developers targeting web apps. Based on VisionMobile’s latest Developer Economics survey of 6,000+ developers, already 23% of HTML5 mobile developers develop web apps, compared to 38% who develop mobile websites. With browsers increasing support for device APIs, and with a growing number of developers going direct to native with PhoneGap, Icenium or Appcelerator, or even with the recently launched Firefox OS, the web world is clearly moving in the direction of apps. As Sir Tim Berners-Lee said in 2012, “the solution is in your hands: develop web apps!” Interested in finding out how you compare to other software developers in your country/region? Take the Developer Economics survey and get your personalised developer scorecard. #apps #web

What can BREW OS teach us about ecosystems? Qualcomm’s Steve Sprigg takes us on a trip down memory lane and gives us an insider view of the history of BREW OS and the lessons learned for Qualcomm. Imagine creating an operating system used on a billion devices and an app store serving millions of apps every day and then consciously making a decision to back away from driving the product. Sound far-fetched? That’s exactly what Qualcomm did when we made the decision to step back from aggressively pushing our BREW OS and app download business in favor of other emerging smartphone and tablet platforms. To understand why we did that and why it was the right decision a bit of history is in order. [tweetable]Unlike many legends, the story of how BREW OS was created is true[/tweetable]. The idea came during an informal whiteboard session with Dr. Paul Jacobs back in the late 1990s. Back then, Qualcomm was in the handset market as a means to jumpstart an ecosystem of devices using CDMA. But as we pushed wireless Internet access and new multimedia features, we found ourselves limited by the lack of a robust, efficient and secure operating system. I was also whining about the demise of the retail software industry. Our discussion brought both issues together and Paul mapped out a two phased strategy with an OS and SDK for app developers to get apps on our phones and subsequently drive an application download business. The picture Paul drew quickly evolved into the now familiar “virtuous circle” with an ecosystem of partners including handset OEMs, wireless operators, application developers and Qualcomm. After a quick weekend trip to our small R&D lab in Scotts Valley, a lot of coffee and very little sleep, I returned to San Diego with a prototype of the OS. Over the next year we recruited some really smart folks, refined the platform and eventually downloaded our first application in December of 2000. A decade later BREW had been integrated into about a billion devices and helped to jumpstart an industry of developers leveraging a lot of cool new features exposed by our chipsets. Under the leadership of Paul and Peggy Johnson, we also assembled one of the finest, most driven and enthusiastic software teams in history. It’s also true that the name BREW came from a brainstorming session where we backed into “Binary Runtime Environment for Wireless” which was certainly more appropriate than some other combinations we threw out there. So with all that success why did we make the tough decision to scale back? The answer lies in reminding ourselves of the original objectives behind the endeavor. Qualcomm is a big believer in ecosystems. We believe that win-win scenarios produce the best opportunities and products. As we had done in the handset business, the purpose behind BREW was to link users to technology by creating an ecosystem of partners who all stood to benefit. But with the emergence of other smartphone operating systems, the need for us to drive our own OS ran counter to that philosophy. Could we have won an OS war? From the perspective of an unabashedly biased leader on that team I believe so. Stretching back to our roots battling those who claimed CDMA defied the laws of physics, Qualcomm tends to attract people who just refuse to accept that things cannot be done. But we also continually reminded ourselves of the objective of driving ecosystems. Even as we developed BREW we put tremendous resource on facilitating the innovation of other operating systems. We actually had larger engineering teams working on those platforms than we did on BREW. As those platforms evolved we saw an even bigger ecosystem emerging and an opportunity to do even more than we could with our own OS. In the end, the decision was not as tough as you might think. BREW OS had accomplished its goals. It had blazed the trail in creating an ecosystem linking the desktop application and wireless worlds. Now other platforms have emerged and Qualcomm is driving the most powerful and efficient chipsets across a broad ecosystem of carriers, device manufacturers, OS providers and app developers. The lesson from BREW is one we routinely leverage at Qualcomm. When we achieve an objective we declare victory and ask our folks to go solve the next problem by defying the laws of physics… #brew #mobileplatform

The global app economy was worth $ 53Bn in 2012, and expected to rise to $ 143Bn in 2016. As part of our new Developer Economics: App Economy Forecasts 2013-2016 report, Senior Analyst, Andreas Pappas, examines developer population, platforms, revenues, and revenue models and shows how app store sales are just a small part of the app economy. In the past few years the mobile industry has experienced a powerful upheaval sparked by the launch of the first iPhone and the creation of the first, true app ecosystem. This event brought about a gradual restructuring of the mobile value chain and a steady shift in value from the traditional pillars of the mobile economy, telco services and mobile handsets into app ecosystems. This emerging component of the value chain is what we call the “mobile app economy” and it represents the fastest growing area in the mobile value chain today and will continue to do so in the foreseeable future. The value migration is profound as can be seen in the following graph. In 2012, the global app economy accounted for 18% of the combined app services & handset market. We estimate that by 2016 the contribution of the app market will rise to 33% of the combined market, equivalent to half of the handset market. While several sources have estimated revenues generated via app-stores and advertising, these estimates are missing the largest part of the app economy. The contribution of app store sales to the total size of the app economy is less than 20%, while the combined app store sales and advertising market accounts for just over a quarter of revenues generated via apps. VisionMobile has developed a model for sizing the direct app economy, that uses the large-scale, fine-grained dataset obtained via Developer Economics surveys. This model incorporates not just revenues generated directly through apps but economic activity generated via commissioned app development, mobile app e-commerce as an app monetisation model (i.e. not including e-commerce as core business), VC funding, services for app developers and several other income sources directly related to mobile apps. The global app economy was worth $ 53Bn in 2012, and expected to rise to $ 68Bn in 2013. It is growing at a 28% CAGR between 2012 and 2016, reaching $143 Bn in 2016. The bulk of this growth will come from APAC and LatAm, the fastest growing markets in terms of smartphone penetration. We estimate the global mobile developer population in 2013 will reach 2.3M individuals with each organisation that is directly involved in the app economy employing 4.5 developers on average, although this figure varies significantly by region. The mobile segment corresponds to 12.6% of the global developer population. In other words, 1 in 8 software developers is involved in mobile development in 2013. VisionMobile’s App Economy Forecast 2013 – 2016 model combines results from our Q3 2013 Developer Economics survey (free download) and a large set of industry figures and indicators to deliver both bottom-up and top-down approaches in sizing the app economy. The VisionMobile App Economy Forecasts 2013-2016 report report provides a unique set of data points on the current state and growth of the app economy including: Forecasts (2013 – 2016) for revenues across regions (North America, Europe, Asia-Pacific, Latin America, Middle East & Africa) Forecasts (2013 – 2016) for revenues across platforms (Android, iOS, HTML5, Windows Phone) Forecasts (2013 – 2016) for revenues across revenue sources (App stores, In-app advertising, mobile e-Commerce, outsourced development, other) Forecasts (2013 – 2016) for the Mobile Developer population globally Mobile developer population by region, platform and revenue source for 2013 Thoughts? Comments? Get in touch with us! – Andreas @PappasAndreas #ios #marketforecasts #mobiledeveloper #Android #appeconomy

We’re proud to present our latest Developer Economics report – the 5th in our highly acclaimed developer research series! The full report is [vm_form_download link_text=’available for download’ product_id=’4062′] on PDF – but you can also visit our newly-launched Developer Economics portal for more data and insights! State of the Developer Nation is the 5th in the series of Developer Economics reports, based on the largest, most global developer survey (over 6,000 respondents from 115 countries). This report tracks the state of mobile ecosystems, developer mindshare, monetisation trends, revenue models and developer tools.

VisionMobile’s Web Technology Lead, Dimitris Michalakos, is presenting at an HTML-themed webinar by FierceWireless. The topic of the webinar is “The Pros and Cons of HTML5 vs. Native” and Dimitris is presenting some of the key HTML-related highlights from our new Developer Economics report.

We’re happy to announce the launch of our new Developer Economics report, based on the largest, most global developer survey (6,000+ respondents from 115+ countries). You can [vm_form_download link_text=’download a free copy’ product_id=’4062′] of this latest report, that tracks the state of mobile ecosystems, developer mindshare, monetisation trends, revenue models and developer tools. The full report is available for [vm_form_download link_text=’free download’ product_id=’4062′] – but you can also view the web version, in our newly-launched Developer Economics website and comment on specific sections of the report! In this article we’ll just present some of the key insights – but stay tuned for more Developer Economics articles, based on data from our latest survey! Developer Mindshare Q3 2013 The Mobile Developer Mindshare Q3 2013 shows Android leading at 71% of developers using the platform, followed by iOS at 56%. HTML5 has entrenched itself as a mobile development technology of choice, with 52% of the developer population using HTML5 technologies for developing mobile apps. Once we double click on that 52% of HTML5 mobile mindshare, a kaleidoscope of colour and options appears. The largest share (38%) of HTML5 developers develop mobile websites with another 23% developing mobile apps, i.e. incorporating offline functionality and deeper browser integration. Hybrid apps, such as those produced by PhoneGap account for 27% of HTML5 mobile developers. A minority of 7% of HTML5 mobile developers use platforms exposing native APIs via JavaScript, such as Firefox OS and BlackBerry 10. Last but not least, 5% of HTML5 mobile developers use a Javascript-to-native converter tool like Appcelerator. Up-and-coming platforms BlackBerry has been successful in transitioning BB legacy developers over to its new BB10 platform, with the new platform having almost the same mindshare as the legacy BlackBerry 5/6/7 had just before the release of BB10 six months ago. The strong interest in Windows Phone observed in past surveys is still there (35% of developers planning to adopt WP) but has subsided by 12 percentage points since Q1 2013. Mobile developers now have a wide gamut of options with challenger platforms competing for their attention. Windows 8 is at 40% of Mobile Developer Intentshare, followed by BlackBerry 10 (28%) and Firefox OS (capturing 27% of all developers planning to adopt a platform). Platform selection and consolidation There is no one-size fits all in mobile platforms. Our research shows that iOS is selected more frequently than average by developers that value revenue potential (+12%), graphics (+7%), app discovery (+8%) and user reach (+10%). Developers tend to use HTML5 more frequently as their primary platform when they value porting (+9%) and speed & cost of development (+4%). BlackBerry 10 is used more frequently than average as a primary platform by developers valuing developer community programmes (+16%). And Windows Phone is most popular for developers looking for the right development environment (+3%) and documentation (+2%). Whether hobbyists or IT managers of Fortune-500 companies, developers use 2.9 mobile platforms concurrently, according to our recent survey of 6,000+ mobile developers. This is the first time we are observing a shift towards diversification, with our earlier 2011-2012 research pointing towards continual platform consolidation: on average mobile developers used 3.2 mobile platforms in our 2011 survey, compared to 2.7 in 2012 and 2.6 in our Q1 2013 research. Platform prioritisation At 2.9 concurrent platforms on average, today’s developer is multi-platform. In this world, not all platforms are equally important to a developer. Prioritisation has an impact on which platform are new apps and features first rolled out, as well as the focus, app quality, sales and revenue on that platform. Our data shows that 84% of mobile developers are using iOS, Android or HTML5 (mobile) as their primary platform. Our research shows a strong lead of iOS over Android with 49.4% vs 59% of platform developers preferring it as their main platform. Whereas Android has 4x times more devices shipping and a significant lead in Mobile Developer Mindshare, it lags behind iOS in terms of Android developers using it as their lead platform. Platform priorities also depend on the level of experience. Developers who are fresh to mobile have a much stronger preference towards Android, with almost twice as many new mobile developers preferring Android (40%) than iOS (21%). Revenues and revenue models At $5,200 per developer per month on average, iOS continues to be the most revenue generating platform for developers, and ahead of Android developer monthly revenues by a margin of 10%. Our research of 6,000+ mobile developers shows that there is no single revenue model that is dominant across all platforms. On Windows Phone, developers have a strong preference towards in-app advertising (43%) and pay-per download (40%). BlackBerry 10 developers have a strong preference towards pay-per download (47%). The picture is much more balanced on Android, iOS and HTML5, with no revenue model dominating to the extent observed on Windows Phone or BlackBerry 10. Developer motivations Contrary to popular perception, money is not the only motivator for mobile app developers – in fact, far from it. Revenues – in some form or other – are the goal for only 50% of mobile developers. The hierarchy of developer motivations shows some surprising findings. At the base of the pyramid, the majority (53%) of mobile developers are motivated by creativity or the sense of achievement, making this the most popular among motivators. The fun of making an app, is a motivator for 40% of mobile developers. Developer tools Our research shows that developer tools are in the must-have app development arsenal of the most sophisticated developers, and also those making most revenues. Across the tools spectrum, iOS developers are the most active and sophisticated users, with 92.5% reporting that they use at least one tool. iOS developers therefore have a clear advantage as being most advanced in tool use, and therefore having the infrastructure to innovate and differentiate. Read the [vm_form_download link_text=’full report’ product_id=’4062′] for more insights and data on the latest mobile development trends! More Developer Economics reports With the release of State of the Developer Nation, we’d also like to present two more reports, based on Developer Economics data. Developer Segmentation 2013 The definitive study of developer segments and the hierarchy of developer motivations: Extensive profiling of the 8 principle developer segments, based on desired outcomes, personal motivators and success metrics. How do the eight mobile developer segments contribute to the app economy? Which developer segments should you approach, and at which stage of your developer program? How should you approach each segment? App Economy Forecasts 2013-2016 Developer population, platforms, revenues, and revenue models sizing and forecasts 2013-2015. Sizing the app economy: developer population by region and platform, distribution of revenues, revenue models and forecasts. What is the size of the developer communities for the three key mobile platforms (Android, iOS, HTML)? Which are the most lucrative revenue models for developers? What are the relative sizes of the app economy? #ios #Android #Blackberry #mobiledevelopment #windows

[A new SDK economy has sprung up to support the needs of the 500,000+ mobile developers and the app economy. Guest author Panos Papadopoulos reviews the growth and rapid consolidation of the SDK economy and the impending rise the Mega SDK vendors] Many would argue that the mobile platform consolidation in the form of today’s Apple / Google duopoly is a good thing for developers; less choice, but two mature platforms and a billion-smartphones addressable market. Despite the platform consolidation, developers face real challenges not just in developing, but also in prototyping, designing, marketing, selling and supporting apps. The quality bar for apps is increasing; apps need to incorporate more functionality in a slicker UI, a sexier package (graphical assets and messaging), as well as through the right marketing channels and at the right price, which is usually free-to-try. App consumers are demanding, expecting utility, convenience and easy of use – all at a low or free price point with monetization shifting from paid downloads to advertising and in-app purchases. Enterprise apps have to talk to legacy systems, be an effective part of a company’s business strategy, enhance brand image, while being secure, reliable and cost efficient to develop and maintain. To support the community of 500,000+ mobile developers globally, a new “SDK economy” has emerged to cater to the needs of mobile developers. A storm of over 500 SDK startups and Enterprise IT incumbents, have emerged since 2009 to help developers in everything from app prototyping and debugging, to user analytics, planning tools, and customer support. These days developers can choose from a gazillion tools to monetize their apps, test, monitor app performance, manage security, study user behaviour, cross-promote apps to attract & engage users, and manage API use and simplify use of cloud services. Today most of the supporting infrastructure for app developers resides, within 3rd party developer tools, rather than within the platform itself. This SDK economy has become the critical infrastructure underneath the app economy. Growth and consolidation in the SDK economy The SDK economy has seen an impressive amount of growth and consolidation in the last 4 years. It’s also an economy that’s intensely suffering in terms of monetisation. The very first SDKs or tools for mobile developers were App store analytics (tracking sales & downloads) from the likes of Distimo and App Annie. Then came ad networks (mobile-centric like AdMob, acquired by Google), later followed by web ad networks expanding to in-app advertising, with ad networks and servers now in abundant supply. Cross platform tools followed soon after, helping develop apps for more platforms, from a single code base. Led by PhoneGap and Appcelerator, the supply of CPTs has exceeded 50 vendors, practically making this area of the tools economy a red ocean. Looking for investment opportunities, VCs began investing in the companies that support Enterprise and Consumer mobile app development. The VC capital created value but it also changed developer perceptions of value, by forcing tool vendors to offer base products for free. It also led to a string of acquisitions (see below), as covered in VisionMobile’s Developer Economics Q1 2013 report. Table: Mergers and Acquisitions in Mobile Developer ToolsCompanyProduct & typeAcquired byDateAptanaDevelopment environmentAppceleratorJan-11MetismoBedrock Java-to-native source code translatorSoftware AGMay-11TapJSGame hosting platform and APIAppMobiJun-11TapLynxApp factoryPush IOJun-11RhoMobileRhodes enterprise apps frameworkMotorola SolutionsJul-11Particle CodeHTML development toolsAppceleratorOct-11NitobiMakers of PhoneGapAdobeOct-11StrobeWeb app framework and app management platformFacebookNov-11UsergridBackend-as-a-ServiceApigeeJan-12CocoafishPost-download app servicesAppceleratorFeb-12WorklightEnterprise app platformIBMFeb-12ChompApp store search and discoveryAppleFeb-12TestFlightBeta testingBurstlyMar-12TrestleBack-end-as-a-serviceFlurryJul-12AppstaticsApp performance trackingserviceAppsfireJul-12InstaopsUser analyticsApigeeAug-12CabanaA tool to turn Facebook pages to mobile appsTwitterOct-12NodeableBig data processingAppceleratorNov-12CrashlyticsMobile crash reportingTwitterJan-13WaviiNatural Language ProcessingGoogleApril-13ParseMobile Backend as a ServiceFacebookApril-13Handmark/ OneLouderApp Store & Mobile app advertising platformSprint NextelMay-13Proxomo SoftwareMobile backend technologyLucent MobileMay-13AppshedCross platform tool & App FactoryIDG GroupMay-13IrisCouchMobile Backend as a ServiceNodejitsuMay-13AeponaAPI exposure and monetization platformIntelMay-13MasheryAPI management and monetizationIntelMay-13StaqGame management platformPlayHavenMay-13 There are three reasons behind the consolidation of the SDK economy: 1. Capital changing the perception of value. VC capital allowed tool vendors to offer developer products for free to accelerate user acquisition. 2. The need to subsidise developer onboarding. Developers are always the side of a mobile platform that Apple, Google, Microsoft or BlackBerry will need to subsidise. As a result platform-provided tools will be usually free and 3rd party tools will be prime acquisition targets for platforms themselves. 3. Catering to adjacent developer needs. There are substantial benefits to developers by integrating functionality across tools (e.g. ad networks with user analytics or crash reporting with performance management), which inevitably leads to acquisitions on tools that are adjacent in the developer journey. Catering to adjacent developer needs also helps tool vendors attract and, most importantly, retain their user base. Who stands to survive and win in this ongoing consolidation of the SDK economy? As is already evident from the earlier M&A list, consolidation will become clustered around where developer money is flowing into: App Marketing Services & Enterprise Mobile Services. App Marketing Services Mobile Advertising is expected to be a 20B market by 2015. Traditional ad networks have already ported their existing products – banner advertising – over to mobile in the form of in-app advertising. This model doesn’t work well yet in mobile and is a factor in why traditional ad networks are not yet profitable. One VC backed company, Flurry, followed a completely different path to capture app marketing revenue. Flurry recognized developers would first worry about the challenges of developing their app(s) and then worry about monetization. Flurry offered developers a host of tools (many of them free) to develop and track their app usage, built a relationship of trust with their developers, emerged as a leader in the mobile services market, and then launched a range of products that will help developers monetize their apps. Flurry considered the developer journey and built a spectrum of solutions to engage developers from the beginning to the end of that journey: – Analytics: a free service to measure actual use of the application – AppCloud (free): a back-end as a service – AppSpot: helping developers monetise, once an app has achieved traction – AppCircle: where developers can re-engage, promote and reach out to more users Flurry is capturing the lucrative app monetization dollars because VC funding gave them a head start. With strategic acquisitions like TrestleApp (a backend service startup that helps developers minimise backend coding) and giving away their analytics for free, Flurry is building the first true mobile, data driven (Big Data) ad network. Other companies are understanding this formula and making a play for App Marketing Services. Burst.ly acquired TestFlight earlier this year in a bid to become the vertical solution that covers all developers’ needs. Similarly, Facebook wanted to reinforce its relationship with developers and did so by acquiring Parse, a BaaS service. This acquisition reflects a growing trend where non-mobile companies see developers as platforms rather than customers, and developer tools as routes for customer acquisition, rather than feature enhancement. Enterprise Mobile Services Enterprise IT needs are different from consumer app needs. In enterprise apps, companies are less concerned with advertising or virtual good purchases and care more about security, stability, predictability and scaling down costs of mobile development and maintenance. Enterprise apps take performance, security and systems integration much more seriously than virality, direct monetization and high engagement. So which mobile tools do enterprises need? User analytics, app performance analytics, crash reporting, integration with existing business logic (connectors with SAP, Oracle, IBM), identity management, data security, and own app store distribution, to name a few. In enterprise IT, the incumbent back-end systems players like SAP, IBM and Oracle have been in the space for years and are very well positioned to ride the enterprise mobility wave. They stand as a formidable wall, deterring smaller vendors from entering the enterprise mobility market because they “own” the back-end and related ecosystems (including solution providers and integrators) within the largest companies. Mobilising those “owned” back-ends by 3rd parties is expensive because of the licensing schemes imposed by the incumbent back-end vendors. At the same time, a wave of smaller, more nimble vendors is making a play at enterprise mobility. Appcelerator, after failing to effectively monetize their cross-platform tools, is now making a vertical stack play, much like Amazon AWS, for mobile. They help developers of any platform access traditional services, such as user management, object persistence, push notifications and analytics via API calls to their cloud services or on-premise installations of their suite. Apigee announced a new product aiming at Mobile, offering user analytics, performance management, crash reporting and network analytics. All of these players clearly want to offer much more than a product that focuses on a tiny vertical or niche market. On the server side, there are tools like Splunk, which give insights into how an app is performing, identify bottlenecks and discover patterns. These tools don’t exist yet in Mobile, and big players, like New Relic, just entered this space. At the same time, the back-end incumbents are strengthening their mobile play. IBM has laid out a mobile strategy that wants to bring in Mobile as part of a more traditional IT strategy. The recent acquisition of Tealeaf aims at helping traditional business better understand and analyze their mobile audiences. Consolidation is already playing out within enterprise mobile services. “As the mobile market heats up, we agree that consolidation will likely result, as larger vendors look to shore up their mobile service offerings. Operational tools, especially those that deliver critical capabilities for monitoring the performance of mobile platforms and the web infrastructures upon which they rely, will become a strategic area of focus in this process. At the end of the day, any vendor who wishes to emerge as a key player in this arena must effectively monitor the whole application environment – transactions, mobile devices, network response, real user experiences, application servers, database connections and more.” –Jim Gochee, SVP Products, New Relic Tool vendors who stick to single functionality – be it prototyping or internationalisation or customer support – will become either niche players with a small but profitable market segment or zombie companies, surviving with minimal profitability and, given the Series A crunch, they will drive consolidation to new heights in 2013. The rise of the Mega SDKs The consolidation of the SDK economy will continue to accelerate leading to the rise of the Mega SDKs, along the two clusters: App Marketing Services: Winners will be those who build developer trust with end-to-end app development support, monetizing all channels that can maximise revenues or reach (e.g. ad networks, cross-promo networks, user analytics) Enterprise Mobile Services: Winners will be those helping developers write across more screens, manage more users, and better understand users (e.g. cross-platform tools, BaaS, app performance management, API management) Competition in the marketing tools will force companies to offer more and more for free, making it difficult for smaller startups to compete with the breadth of tools and the scale of companies like Flurry and Facebook. In the enterprise IT world, we should expect new titans to emerge or incumbents like IBM to enter and become the Amazon Web Services of mobile. Who do you think will be the first Mega SDK to emerge? #developertools #flurry #sdkeconomy

[Facebook is competing for eyeballs on Google’s own turf: Android. Guest author Francisco Kattan explains why Facebook’s Home strategy takes us back to the days of the 2005 home screen turf war and how Google, Yahoo and Samsung are impacted] By now most of you have heard of Facebook Home. Some of you might have even tried it. If you have been hiding under a rock for the past month, there is a good summary here: Facebook Home “replaces your standard Android’s homescreen with an immersive Facebook experience featuring full-screen photos, status updates, and notifications. Facebook also announced that a special version of Home will come pre-installed on the new HTC First phone on AT&T.” Facebook Home is Facebook’s attempt at taking over the user experience and app discovery of most phones without having to build a phone itself (which would result in a meager market share at best). Although execution by Facebook has been poor (see review here), the strategy behind it is brilliant. Moreover, this move represents such a significant threat to other players in the ecosystem that it will spark a second battle for control of the home screen and app discovery. To emphasize the importance of the home screen to ecosystem players, I borrow heavily from VisionMobile’s own report on this topic, published in 2009: “The active idle-screen (aka home screen or phone top) is the synonym of zero-click distance. It is the most premium real-estate on the handset for service delivery and promotion.” “The ownership of the idle screen will become as elementary as customer ownership; as ubiquitous as handset branding; and as important a monetisation tool as handset accessories.” More than a Home Screen But Facebook Home is not just a home screen – it is a very deep application itself, with its own contacts, its own messaging, its own photo sharing, its own video sharing, and more (see illustration above). Facebook is not just providing a launchpad or discovery portal for other apps on the phone, it is virtually replacing many of them by pushing them down, deeper into the phone, where they are harder to discover. If you have an app that competes with Facebook, this is not cool. And as Facebook introduces new services, other parts of the ecosystem should be worried. Quoting again from the 2009 VisionMobile report: “The home screen is the starting point for all user journeys; it is therefore natural for the home screen to provide shortcuts into functionality that is used most frequently, such as search – whether it is for contacts, voicemail summaries, free minutes remaining, where’s-my-nearest, what’s my Facebook status and many more creative search scenarios. We believe that the home screen is ideally placed to aggregate all such information from third party sources in the Internet cloud, the network and the device” Disrupting ecosystem players, one at a time Facebook unnerves many ecosystem players with its Home move. Google can’t allow Facebook to take over the user experience of its Android operating system. The idea was for the user experience to be owned by Google and extended by its Android licensees, not a competitor. Many of Google’s own services are threatened by Facebook Home, especially Gmail, Talk, Hangouts, Contacts, and of course Google+. Even Google Maps would be threatened should Facebook launch its own mapping service as has been rumored (It has been widely reported that Facebook bid for Waze before its recent acquisition by Google). Samsung can’t allow Facebook (or even Google for that matter) to commoditize its devices. Facebook Home reduces the ability of handset makers to differentiate and promote their own services. With Facebook Home, Samsung devices will look and behave a lot like HTC devices. Messaging service providers like Whatsapp, Google (Gmail), Yahoo (Mail) or the new and cool Just Me can’t allow Facebook to become the default messaging service on consumers’ phones. If you are on Facebook Home, it is much easier to send a Facebook message than dig deeper to find other messaging apps or even the phone’s native SMS client. Yahoo has bigger problems, but if Marissa Mayer has any hope of fixing the company, it will need to figure out how to have a prominent mobile presence. This is not possible if consumers choose Facebook Home. With Facebook Home, Yahoo’s Mail, Messenger, Flickr, and even Yahoo’s cool new Tumblr service would be pushed down and become a second-class citizens on the phone. AT&T, Verizon, Telefonica, Vodafone, and mobile operators in general who are still fighting to become relevant in the ecosystem lose even more control of service discovery. Operators today still exert some influence over some handset makers, especially in postpaid markets where they control handset distribution, subsidies and marketing spend. But as control for the user experience moves from handset makers to over –the-top providers like Facebook, the carrier’s influence over the ecosystem is crushed even more. Back to the Future – The first battle for the home screen Once upon a time in the not-too-distant past (early 2000s) device makers differentiated primarily on the basis of hardware. What’s the form factor? Clam shell or candy bar? Is there a full Qwerty keyboard? Bluetooth? 2G or 3G? How long is the battery life? But as the hardware became commoditized, device makers turned to differentiation on the basis of the software, and in particular the home screen and overall user interface of the phone. When I was at Adobe I saw this play out first hand. Device makers were turning to Adobe Flash as the platform for customizing their user interfaces and deliver more engaging home screens. A couple of good examples are the LG Chocolate and the Samsung D900. They both had beautiful home screens, powered by Adobe Flash. The LG Prada took this concept quite a bit further when it launched with a big splash in 2006. A beautiful, fashionable device with cool looking apps running on the home screen, powered by Flash. It was the first phone with a capacitive touch screen. Take a look and you’ll see a resemblance to some of today’s smartphone interfaces. Keep in mind this was before the iPhone. The operators want their piece of the action. Given the influence large carriers enjoyed over device makers at the time, there was an opportunity for them to take over the home screen to expose their own services. To enable such operators Adobe launched Flash Home in 2008 (launched by my team at the time, coincidentally). See the news here. “Adobe Flash Home, an over-the-air, customizable UI, enabling consumers to personalize the look and feel of their handsets and discover new content and services via home screens and data-enabled wallpapers” It sounds a lot like Facebook Home – except that rather than surfacing Facebook services to the home screen, it was about surfacing the operator’s walled gardened services. Too little too late. Unfortunately for operators, before their efforts to take over the home screen had a chance to succeed, iOS and Android devices began to sell in large volumes, upsetting the whole ecosystem and limiting operator influence even more. Operators diverted their focus to acquiring more data users with smartphones rather than promoting their own data services on feature phones. How should the ecosystem players react to Facebook Home? Google. Google could launch its own “Google Home” of course, but a more wise strategy for Google is to block third party app developers from messing with the home screen. This could be done by closing the relevant APIs or more easily by changing the terms of its agreement with developers. Google’s strategy is of course to generate advertising revenues from its services, and this requires Google to “crush down anything that stands between consumer eyeballs and Google inventory” (quoted from a good VisionMobile post on Google strategy: “Flatten, Expand, and Mine”). If any app can bury all Google services behind a proprietary app launcher like Facebook Home can, that app could limit Google’s mobile ad revenues significantly. The way things stand, if Facebook Home were to gain user traction, it is not hard to see that advertising dollars would shift from Google to Facebook. This is not a desirable outcome for Google, and one that, if not blocked by Google, would ignite a battle for control of the Android home screen. Yahoo. For as long as Google is allowing apps to take over the home screen, Yahoo should copy Facebook’s strategy and develop “Yahoo! Home” to surface all its services to the top of the phone. Flickr pictures, Tumblr posts, Yahoo messaging, Yahoo News, Yahoo Weather, and all other Yahoo services would be discovered much more easily, boosting Yahoo’s advertising revenues. To improve the likelihood that consumers will actually turn on Yahoo Home, Yahoo should learn from Facebook’s execution mistakes and do a better job of integrating with the rest of the operating system and apps. Facebook messed up with this integration and buried even critical OS functions like notifications, battery life, and even the time of day behind Facebook pictures. Yahoo (or anyone else attempting a home screen app) should also do a better job surfacing the user’s favorite apps. In other words, the home screen should expose not only Yahoo’s own apps, but also other favorite apps selected by the user to ensure a higher level of adoption. Samsung. Samsung should fork Android and launch its own Android version in much the same way Amazon did with Kindle. Samsung is now powerful enough to maintain its own platform, using its own Galaxy brand, its own home screen, an off-the-shelf store (Amazon or Yandex store) and a white label maps solution (like Nokia Maps) – in other words, all the ingredients needed to circumvent Google’s control points. In fact, even without the threat from Facebook Home, Samsung is already investing in a vertical, Apple-like strategy strategy with the Tizen platform. Whether Tizen succeeds or not, Samsung has all the ingredients to fork Android and tighten its control over the operating system. What are your thoughts? Do you think Facebook Home will spark a new battle for the home screen? Do you think Google should block such apps from taking over Android? What should Samsung, Yahoo, and the other big boys do? – Francisco (@FranciscoKattan) #activeidlescreen #Android #facebook #facebookhome

[Is profit share overrated as a measure of company viability? Guest author Jay Goldberg takes a contrasting viewpoint to our recent “Profit share trap” article, arguing that profitability has been the key to predicting Apple’s past – and future success.] I like to think I sparked a meme. In 2009, I wrote a analysis comparing the market share of the various handset makers and their respective share of industry profits. At the time, Apple’s had 1% or 2% share of the global handset market, and everyone was writing off the iPhone as an unimportant niche. And by everyone, I mean not just analysts but major companies like Nokia and Motorola. The mobile phone industry had a case of willful ignorance back then, but by looking at profit share versus market share it was pretty clear that something important going on here. Today, this ‘profit share ‘ line of analysis has become very common, some would say overused. Running a basis by looking at a single metric usually ends badly. There are pitfalls in focusing too much attention on profitability, especially when it comes at the cost of making good products and satisfying customers’ needs. Nonetheless, if you have to pick just one metric, profitability is the one that matters the most. Profits matter because they give companies options. I could launch a line of phones today and give them away for free. I could reach 100% market share, but I could only do it once. Profits, not market share or revenue, are what let companies survive. Many argue that Apple is facing a host of problems now: Competitors phones are cheaper; Apple cannot do the web or ‘big data’; low-cost phones from Asia, etc. The list is long. But everyone in the industry faces those problems. Apple has the ability to weather this sea of woes because they have profits. They can use those profits to do more marketing, or buy market share with discounts, or glue $100 bills to every iPhone. Samsung can too, but no one else can. By contrast, look at Blackberry. They are now barely profitable, and as a result analysts are wondering how Blackberry will be able to afford the next product cycle. No one is asking that about Apple and Samsung. Because of their profits those two can weather any storms that come their way. Profitability is the best way to assess the long-term health of a company. You can buy market share, but you have to invest for profitability, and invest wisely. There is no question that Apple needs to come up with ever-improving products and find new ways to inspire customers. But because of their profitability, they have options. Some would argue that as Android phones get ever cheaper and the OS itself gradually improves, consumers will migrate. After all, the functionality of an Android smartphone is ‘good enough’ when compared to that of an iPhone. But I think that misses the point of what Apple is doing. Their goal has always been to create products that are designed to invoke an emotional response. That was clearly on display during the WWDC keynotes, especially with the new TV ads. Apple can afford to do expensive brand marketing because it has ample profits with which to invest. If they had focused on market share years ago, they would be in no position to defend themselves today and would face constraints in their ability to make those kinds of products and those kinds of ads. Ask Blackberry. Or HTC. Or Sony. Or LG. #Apple #handsets #ios #profits

[An AngelList study about the top companies being referenced by startups in their one-line pitching. VisionMobile Sales Operation Manager, Chris Eleftheriadis, shares his insights on how nowadays startups communicate their value proposition to investors] Startups are abundant today – addressing every imaginable user need, and often in unconventional ways. Many of today’s startups, from e-commerce to healthcare, are combining many “business patterns” – social, mobile, media, marketplaces, gamification, reputation systems, and many more. And there lies the challenge: how do you communicate your startup’s value proposition in a one-line elevator pitch? Very often your elevator pitch will determine if you can get a meeting with an investor, or the number of positives from a partner onboarding campaign. This challenge of crafting a short, memorable, meaningful one-line elevator pitch has led startups to use more creative techniques such as referring or comparing to established startup success stories. Call it LinkedIn for X, AirBnB for Y, eBay for Z. As part of our research into ecosystems we asked ourselves an unusual question – Which are the most popular companies that startups are using as a reference or a meme in order to describe what they do? This question led us to some very interesting insights that we wanted to share in this article. We crawled AngelList, the go-to-site for tracking startup activity, to answer this question. To our surprise, we found so many relevant examples of referenced pitching that lead to notable patterns on how innovation is understood and communicated. The most referenced companies In our research of AngelList startups we identified more than 60 companies referenced by more than 1700 startups in their one-line pitches. The top 10 of those companies are already culture memes: they account for an impressive 46% of all startup references on Angelist. Linkedin tops the leaderboard with about 113 references identified with Pinterest and eBay following closely behind with 105 and 103 references. The top 10 is made up of Facebook, Yelp, Instagram, Groupon, Airbnb, Youtube and Amazon. We’ve also created a cool visualisation with the top companies being referred – as well as the startups who are using them to define themselves. Take a look! The Top 9 types of referenced pitching 1. Common. The most common of referenced pitching can be drilled down to 3 similar formats: – X for Y: Yammer for Education. – X meets Y: Yelp meets Hipster meets Foursquare: – The X of Y: The Pinterest of online dating 2. Funny (ironic). Very effective especially in its sarcastic form: – Facebook for the dead. – Instagram for basketball junkies. – Think “Netflix for Grandma” + “Help, I’ve fallen and I cant get up”. – Yelp for medical marijuana. 2.1. Funny (compound). Combining two or more companies: – If YouTube and Twitter made ridiculously good-looking babies. – If Pandora and Facebook had a baby, it would be… – LinkedIn and match.com had a baby who went to law school. 3. But better. In short “we’re doing same thing as them but better” – it’s kind of ironic but I guess it could work with some investors: – Better than Amazon” customer experience for any Brand. – LinkedIn on Steroids. – Search engine that beats Kayak.com’s fares by up to 80%. – VEVO/YouTube/Spotify/Pandora/MobileRoadie/OurStage – but better. 4. Equation. Plain mathematics – can’t be wrong! – (Google x Facebook x Amazon) + (Universal Reviews) – Ebay+Soundcloud= … – FLIMBY=Yammer+Delicious+Gotomeeting+more – Instagram + Trips = … 5. Explanatory. It’s like if the common type was a little bit more precise: – A Spotify with Pandora on top. – Solving the Enterprise Dropbox problem. – Think TripAdvisor but instead of reviewing a hotel you review your street. – What Open table is for restaurants we are for sports venues! 6. For nonprofits. This can be any type of description but explicitly for nonprofits: – Kickstarter on Steroids, tailored for nonprofits – Marriage of Salesforce, WordPress, Constant Contact, Ebay for Nonprofits – Spotify for Donors & Nonprofits – Yammer for Nonprofits 7. Crash collusion. It’s that unpredictable result when you mix things: – Blends Facebook, Pinterest, Google & Twitter creating world’s 1st social shopping network. – SurveyMonkey+LinkedIn+Facebook mashed together. – Think Flipboard and Hootsuite In One. 8. Regional. Same activity as the referenced company but focused on a specific region – in short pure copycats. – Yelp for Brazil. – GetTaxi for Southeast Asia & Middle East. – Kickstarter of the Arab world. – Russian LinkedIn. 9. User groups. Again, same activity but targeting only specific user groups. – TripAdvisor meets 1 million+ airline flight crew. – eHarmony.com for Gays and Lesbians. – Pinterest for MEN. – TripAdvisor for Muslim-friendly hotels. Referenced pitching is a double-edged sword. On one hand, it makes it clear to explain your value proposition and implies a sense of accomplishment. On the other hand, is it really safer to go with the flow and define your startup in terms of another, successful business or separate yourself from the crowd? What emerges from this research is that 18 out of 20 most referenced startups practice a multi-sided platform model. These are marketplaces connecting disparate user groups (e.g. OpenTable connecting restaurants with restaurant-goers, LinkedIn connecting professionals with HR recruiters), running affiliate programs (e.g. Amazon), or exposing business assets to developers via APIs whether short-head (e.g. Spotify apps) or long tail (e.g. Twilio). With 95% of referenced startups being marketplaces, the mechanisms for creating and capturing value in today’s digital world are governed by what we call ecosystem economics. Today’s innovation lies more in business models than technology. – Chris (@abyssnet) #ebay #startup #linkedin #angellist #facebook #pinterest

[Are the smartphone wars about profit share or market share? Guest author Sameer Singh argues that the case for profit is fundamentally misunderstood.] Over the past few days, there has been a lot of noise in the tech media about the supremacy of “profit share” over “market share”, specifically related to Apple’s performance in the smartphone market (but it can be extended to Samsung as well). Most proponents of this argument seem to fundamentally misunderstand the long-term relevance of the “profit share” metric. Let’s make a more educated comparison between the two metrics to understand how each can be used to analyze the smartphone industry. This article was originally published at: http://www.tech-thoughts.net/2013/05/apple-samsung-profit-share-trap.html#.Ua2-jmRgbkx Understanding “Market Share” & “Profit Share” Certain segments of the tech media seem to be obsessed with the profit share vs. market share comparison, with some championing a “ratio of profits to market share” metric. Unfortunately, the two metrics are not necessarily comparable. Market share is a measure of how a limited pool of consumers buy (or own) products from various vendors or platforms. The key drivers of market share are, obviously, competition and pricing (i.e. price segmentation of consumer markets). Even if a market is growing, market share trends give you a fairly good understanding of the platform/OEM dynamics in the industry. Profit share is a comparison of profitability among a set of competing companies. While profit share is also driven by the competition & price segments, it is also affected by dynamics within a company’s own supply chain. Having a high profit share does not necessarily mean that it was “taken” from competitors. It could also mean that it was “taken” from suppliers and/or distributors. This is especially true in the smartphone sector, where most mature market sales are subsidized by operators and supplier margins are squeezed by large OEMs. Since firms do not compete for a limited pool of profits, comparisons between market share and profit share are extremely difficult. Profit Share vs. Market Share: Which is More Relevant for the Mobile Industry? Since profit share does give us a good understanding of the relative profitability of competing companies, it is a good metric to gauge the current health of individual companies (specifically OEMs). But which metric is more relevant to gauge the long-term direction of a platform or an industry? Let’s ask Steve Jobs: “What ruined Apple was not growth … They got very greedy … Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible … they went for profits. They made outlandish profits for about four years. What this cost them was their future. What they should have been doing is making rational profits and going for market share.” As per this quote, circa 1995, Steve Jobs seems to think that market share is the more relevant metric to gauge long-term impact. But there’s no reason for us to take this quote as gospel just because it came from Steve Jobs. Let’s analyze his argument in detail. Historical industry patterns and disruption theory show us that as products improve and become “good enough” for mainstream use, it becomes more difficult to create a strong value proposition by making a “better” product. As this trend occurs, it becomes more and more difficult to maintain a premium over your competitor’s products, product pricing becomes a bigger purchase consideration and brand value suffers. This is especially true in the technology industry, where the pace of product improvement is extremely rapid and seems to be getting faster with each new technology cycle. This would already be fairly clear to anyone tracking the technology industry, especially the smartphone industry. Five years ago, brands like Palm, Nokia, Blackberry and Motorola dominated the industry, but are now barely relevant compared to Apple & Samsung’s dominance. Also, regional smartphone vendors like Huawei, Lenovo and ZTE have risen to prominence in emerging markets and are making inroads into key mature markets. As products become good enough, the software/services ecosystem evolves from being a differentiator to a hygiene factor, i.e. a necessary but not sufficient condition for a purchase. At that point, consumers expect a product to offer all the advantages offered by leading ecosystems and the lack of access to such an ecosystem becomes a significant entry barrier for an OEM (e.g.: Nokia’s struggles with Windows Phone). This is why the platform that offers the lowest entry barriers to OEMs (combination of a strong applications/services ecosystem and low cost of entry) is the one that ends up dominating an industry. In other words, the easiest path to hardware commoditization is the path the industry generally evolves in. Therefore, it is the platform with the greatest market share that has the greatest long-term potential. Based on this, it would seem that Steve Jobs was right about the supremacy of market share, at least for platforms. While profit share and OEM/hardware market share are good metrics to judge the current state of a company or OEM, they are quite irrelevant to gauge the current health or long-term potential of a platform. The Profit Share Trap Profit share in the smartphone industry is currently skewed because of the economics involved. Smartphones sold in markets with higher purchasing power are mostly subsidized, which ensures that today’s major brands dominate. Smartphones sold in markets with lower purchasing power are mostly unsubsidized, which ensures the dominance of low-end phones, and a number of low-end vendors (with far lower profits). This is has been the cause of the polarized profit share picture. But is this structure sustainable as the industry evolves? As smartphones become good enough for both consumers and carriers (there are signs that this may already be happening), purchasing patterns become more dependent on pricing and replacement purchases slow down. As price points drop, emerging market consumers will buy more cheap smartphones, while mature market carriers will attempt to benefit from improved product parity. Some carriers, like T-Mobile, may resist subsidies altogether (the economics in the US smartphone market make this a possibility), while others may attempt to push comparable smartphones with lower subsidy bills. This would benefit smartphone vendors with lower cost structures, i.e. today’s low-end/regional vendors (Lenovo, Huawei, etc.). These low-end vendors could accelerate this process through acquisitions. Since Apple’s pricing is static, its growth and volumes will begin to slow (this long-term trend may be even sharper in the tablet market as the price-demand relationship is more natural, without carrier-driven distortions). There is enough evidence of this already as Apple as struggled to add more operator partnerships at its current terms (including large carriers like China Mobile). Even a “low-end” iPhone may be too expensive to buck this trend. In the case of Samsung, they will be forced to lower prices or face lower volumes (already happening in India & China). As Apple & Samsung’s market dominance is challenged, suppliers will have more potential customers and see greater bargaining power, which would further pressure OEM profit margins. Based on this, it is clear that a polarized profit share picture is a necessity during the early stages of an industry cycle. However, as products become good enough, pricing pressure and supplier bargaining power limits profits. This “profit share trap” becomes more problematic as investors & analysts continue to expect the same, unsustainable level of growth and profitability. The only way to escape this trap is by diversifying (IBM is an example), becoming a services/software/component supplier to the increasingly competitive OEM space (Samsung has the advantage here) or by the riskiest approach – attempting another disruption (Apple’s rumored iWatch seems to be such an attempt). #Apple #handsetmanufacturers #handsetprofits #samsung

[We’ve just completed the largest developer survey to date and the results are starting to come in. Marketing Manager, Matos Kapetanakis, discusses some early insights, focusing on platform mindshare and the role of HTML5] UPDATE: The full report is now available for [vm_form_download link_text=’free download’ product_id=’4062′] Biggest developer survey We’re thrilled to announce that the Q2 Developer Economics survey we conducted throughout April was the most successful to date, zooming past the 6,000 respondents mark, making it the biggest developer survey globally. We broke through the 6,000 developer mark mainly thanks to the help of our 48 Marketing and Regional partners. Together we reached developers from an unprecedented 115 countries, from mature markets, like the US and Western Europe, to emerging markets, like Brazil, Russia, India and China. To reach developers on a global scale, we translated the survey in 10 languages (Arabic, Chinese, French, German, Japanese, Korean, Portuguese, Russian, Spanish, and Swedish), aided by our local partners, who helped us reach the local dev communities. Thanks to a partnership with Mobile Monday, we also promoted through over 20 local MoMo chapters in Asia and Oceania. And for those of you who took our survey and are eagerly awaiting the results of the prize draw – here are the winners! 1. One new iPhone 5 (won by @Adrianod1993) 2. Two Samsung Galaxy SIII (won by @devitry & @Sourav_Lahoti) 3. Two Nokia Lumia 920 (won by John P and Serge J) 4. Two BlackBerry Z10 (won by Shaun D and @99CentsApps) Exclusive prizes for respondents who also subscribed to our developer panel: 1. One AR Drone 2.0 (value USD 300 – won by @to_pe) 2. One Nest Learning Thermostat (value USD 250 – won by Frank D) 3. One Nike Fuel Band (value USD 150 – won by Branko N) In the next two months we ‘ll be diving into the results of the survey. The Developer Economics state of the developer nation report will be launched in July, as a free download thanks to the sponsorship by BlackBerry, Mozilla, Intel and Telefonica. This 5th incarnation of the Developer Economics report will feature the latest market trends, including Developer Mindshare and Intentshare, platform selection criteria, revenue models, revenues per app and many more. To whet your appetite until the July launch, you can read the previous, 4th edition of the Developer Economics report. To be the first get the Developer Economics 5th Edition report, sign up for our mailing list! Sneak peek: Android, iOS duopoly entrenched – with HTML closely behind Our early results from the Q2 app developer survey are starting to come in – starting with the Developer Mindshare Index 2Q13, i.e. the percentage of mobile developers using each app platform. As you can see in the graph, the use of Android and iOS is still predominant, with a few percentage points of change for both platforms when compared to our 4Q12 survey. You’ll also notice the continued growth of HMTL as the third horse in the platform race, slowly creeping up on iOS. These trends have been steady over the past year – but what do they mean? The continued positioning of Android and iOS as the top two platforms is a no-brainer: Android has the largest installed base and iOS enjoys the highest revenue potential overall – so why does HTML5 continue to grow? HTML5 grows in popularity as large groups of web developers are leaping over the ever-shrinking chasm from desktop to mobile apps. Moreover, HTML5 allows for the development and deployment of apps that work across different platforms, usually at a lower cost of developing HTML apps, and for most app categories. About two thirds of developers targeting HTML mobile develop web sites or web apps while just under a third are using PhoneGap. Stay tuned for more analysis on the route to market for HTML5 apps in the full report. HTML5 has wide industry backing across telcos, handset makers and platforms (Firefox OS, BlackBerry WebWorks and Tizen) going for it. At the same time, there are certain key disadvantages, namely access to native platform APIs, as well as the lack of a unified development environment and quality debugging tools. HTML5 is now challenging the duopoly as a development or deployment platform – with the route to market varying across browsers, hybrid apps (e.g. PhoneGap), JavaScript converters (Appcelerator) and dedicated platform frameworks (BlackBerry WebWorks). We still see a growing diversity in the go-to-market approaches for HTML5 developers, and one which we believe will continue to expand. We‘ll be analyzing the HTML vs. native tradeoffs in a future report, but in the meantime – what’s your take on the HTML vs. native debate? Sneak peek: Windows 8 and BB 10 are gaining traction As you can see from the early Developer Mindshare graph, Windows 8 and BlackBerry 10 have already attracted a reasonable amount of developer attention. What’s important here is that BlackBerry developers have been quick to migrate from the old legacy (5,6,7) platforms and adopt the latest, BB10 platform. What’s interesting to note in the graph above, comparing the use of BB platforms between the two latest surveys (4Q12 vs. 2Q13) is the fact that the BB 5,6,7 platforms are quickly fading into oblivion, with BB10 mushrooming to a substantial 15% mindshare in just 6 months. The mindshare of BB10 is slightly less than that of BB 5,6,7 six months ago, but the platform is still gaining in strength, as our data for the platforms that developers plan to adopt seem to suggest, so there’s room for growth. The extent to which the new BlackBerry platform can grow in Developer Mindshare depends primarily on the volume of devices that BlackBerry will manage to sell in the coming months, given that reach is the primary reason for platform selection. Competing against Windows Phone and BlackBerry 10, new entrants Firefox OS and Tizen are slowly gaining support from a few handset OEMs and network operators. Another open question is whether the HTML5 platform proponents – Tizen, Firefox OS and BlackBerry WebWorks – should band together towards a single HTML5 implementation or keep pursuing independent and conflicting strategies. What’s your take? Full report available in July We’ll be stopping our sneak peek here – stay tuned for the full report for more (out in July)! There, you’ll find an in-depth analysis of major trends, such as the shifting balance of power between the top platforms, devices vs. tablets, revenue models, as well as the main factors affecting app monetization. If you haven’t already done so, subscribe to our mailing list to receive word of the report publication. Until next time, – Matos (@visionmobile) #ios #html5 #mobiledeveloper #Android #windowsphone #Blackberry

[How do ecosystem economics shape the mobile competitive landscape? What are the key performance indicators and how should app ecosystem stakeholders evaluate opportunities? Andreas Pappas seeks answers to these not-so-trivial questions in this, first post, in a series of blog-posts on ecosystem economics.] Measuring ecosystem performance Since 2008 we have witnessed the rise of mobile app ecosystems – iOS, Android, BlackBerry and Windows Phone giving rise to millions of apps and billions of smartphones. We have also witnessed the collapse of legacy mobile platforms – Symbian, Java ME and BREW. This has led to this shift in mobile platforms, and the rapid growth of smartphones. The cause of this upheaval in the mobile and software industry had less to do with the openness of Android or the user experience of Apple and more to do with a change of business models. Legacy mobile operating systems (e.g. Symbian) were designed around handset makers’ business models. As such, they were optimised to improve supply efficiencies in terms of cost and performance. In contrast, new mobile app ecosystems (e.g. Android) are being designed around developers’ business models. As such, iOS, Android and Windows Phone are optimised to create and sustain demand from both users and developers. The triumph of iOS and Android is a testament to the superiority of ecosystems economics over legacy business models. The demand-led growth of app ecosystems has led to a non-linear growth of smartphone shipments that surpassed feature phone shipments for the first time in history. In addition, the winner-takes-all property of ecosystem economics has led to the Apple-Google duopoly. Today‘s platform landscape resembles the desktop OS market of the 90s which was dominated by a single platform, Microsoft Windows. The elusive nature of ecosystem economics The economics and business models of app ecosystems are based on network effects. By connecting users to developers, ecosystems create network effects, that is, they drive demand between users and developers: the more users, the more handsets, and therefore the more developers, the more apps and so more users. It’s a positive feedback loop that gives non-linear growth properties that outcompete traditional linear economies of scale. Network effects take place not just between users and developers, but also between all four sides of app ecosystems, including handset manufacturers, and network operators. The next chart shows the network effects at play within the iOS ecosystem, and the value added and captured, by each side. Network effects are just the foundations of ecosystem economics. There are many more properties of ecosystem economics such as external subsidies, exit barriers (lock-in), stored value, non-linear growth, winner-takes-all effects, and many more. We will examine ecosystem economics as part of a future research paper – any comments on what we should include? Because of their non-linear growth, ecosystem economics lead to winner-takes-all outcomes and highly concentrated markets. The first players in the market are able to inhibit the growth of latecomers by having disproportionately fast growth, but also by introducing exit barriers. Today’s iOS and Android duopoly, and the difficulty that followers like Windows Phone, BlackBerry, Bada, Tizen, and Firefox OS face in catching up with the leaders, is a direct result of the economics driving mobile ecosystems. The only way to compete with Apple and Google is not head on, but by changing the basis of competition or by diluting the control points. How can this be achieved? We will expand on these options in a future post. While we are convinced that ecosystem economics dictate the power play in mobile app ecosystems, the nature and the mechanics of such economics are not well understood. We all talk about ecosystems and network effects but rarely see these outlined, explained and quantified. Understanding and quantifying ecosystems economics is the key to understanding the competitive landscape of today’s app economy, assessing the value of an ecosystem and making informed decisions regarding the long term viability of platforms and the investment opportunity for developers, enterprises, handset OEMs, network operators and consumers. We have developed a unique understanding of mobile ecosystems by modeling ecosystem economics and measuring developer economics.  In our effort to improve our understanding and our ability to assess the success or failure of an ecosystem, we are building a model that takes into account a variety of hard data and perceptions to determine an ecosystem performance index. The aim is to capture in a metric, the relative performance of each ecosystem against each other, in a way that also conveys information about its long-term viability and the size of the investment opportunity for developers, enterprises, handset makers, network operators and consumers alike. Ecosystem performance There is an abundance of data out there that points to the relative strength of each platform: every once in a while Apple and Google announce app-store data such as apps available, downloads, activations and money paid to developers to highlight their dominant position in the market. Analytics firms publish metrics around user engagement, monetization or eCPM for each of the platforms they monitor. VisionMobile measures the Developer Mindshare Index and developer revenues via our Developer Economics research and benchmarks ecosystem characteristics through our Market Sonar service. Such metrics provide a glimpse of ecosystem performance and provide a great service as marketing messages for headline generation. But how important is all this data to ecosystem stakeholders? How are we to assess whether platform A is in a better position than platform B and what momentum each platform carries going forward? In other words, if an enterprise were to invest in one of these ecosystems, how would they go about evaluating them and reaching an investment decision from the perspective of users, partners or developers? Ecosystem value is an indicator of the capacity of an ecosystem to create value for its stakeholders. The stakeholders of a platform include all those that capture and add value to an ecosystem, including consumers, enterprises, developers and businesses investing in or supporting the ecosystem (e.g. handset makers, operators, platform vendors). In order to measure this value we first need to understand how value is added to and captured from an ecosystem and to define performance indicators that are linked to the value of an ecosystem. In the following sections we will look at each stakeholder group separately in order to determine the performance KPIs that matter to each group. Ecosystem value to users Back in the day of the feature phone, consumer choice focused on which phone was best in serving four use cases: making phone calls, sending texts, taking photos and storing contacts. Differentiation across these use cases was quite limited among devices so other factors such as cost, design, carrier tariffs and coolness factor weighted much more on users’ decision process. With smartphones it’s not just about creating value around these four use cases, but more about the number and the value of use cases that an apps ecosystem creates for the user. Nowadays phones are more like tools: flashlights, compasses and spirit levels. Phones are also media players, TVs and game consoles using via apps/services such as iTunes, YouTube and Angry Birds. Users now select a phone based on thousands of use cases that are realized via a million apps. It is not just the app count that matters, but also the quality, diversity, reliability, robustness of the apps and the ecosystem. The right mix of these ingredients is the key to creating user value and tapping into the new type of ecosystem economics. At the same time, enterprise users value a different set of features and ecosystem metrics with security and separation of business/personal accounts featuring high on the list. Total cost of ownership is also important to enterprises that use a mobile platform to optimise their business processes. The diversity of handset price points is also a significant ecosystem metric. Android has achieved wide adoption partly due to the availability of Android handsets from $50 to $500 points, while iOS covers mostly the top range. In western countries, operator subsidies can have a significant impact on consumer choice as they make devices more affordable to consumers at the cost of a contract lock-in. At the same time, in the price-sensitive, emerging markets that now drive smartphone growth, subsidies rarely apply. Regional variations may have a significant impact on the overall value of a platform to users; availability of apps and services in local markets varies and therefore the utility of a platform may also very accordingly. In China, for example, Android is usually stripped of most or all Google services such as access to Google Play, thus diluting the value proposition of Android in this market. Apart from the factors that attract users to a platform there are also inhibitors that prevent consumers from switching to a new platform. These relate to user investment in a platform – including the experience adaptation tax (i.e. the cost of adapting to a new UI), the cost of repurchasing apps on that platform, the need to seek alternatives where apps don’t exist. Ecosystem value to developers Our Developer Economics research has found that when selecting a platform, the most important consideration for developers is user reach, which is an indicator of the addressable market for developers. It is important to note that not all developers capture value in the same way; so other factors such as familiarity with the development environment, learning curve and cost of development are also important criteria for developers when selecting a platform. Ultimately, though, app development is a business and monetisation is critical to the mid- to long-term success of this business. The number of enterprises and verticals that adopt a platform is also a key source of developer value as enterprises and verticals that commission apps on a platform create business for developers. Moreover, availability of developer tools and services can act as attractors for developers as they minimise onboarding friction and facilitate development, marketing and monetisation: Cross Platform Tools are a special case here, allowing developers to work across platforms and therefore damping the effect of platform switching costs; however, lack of support for a platform among popular CPTs may have an adverse effect on developer onboarding. Discovery, distribution and monetisation services have also become essential elements of mobile app ecosystems because they reduce friction points between developers and users. At the same time, absence of such mechanisms (as in the case of mobile web apps) can be detrimental to the future prospects of a platform. However there are also several inhibitors for developers. For example, capital investment (e.g. as required for iOS development), high development costs, poor local reach of a platform and insufficient monetisation opportunities will deter developers from adopting a new platform or will drive them away from one platform in favour of another. Development costs are a key element of the ROI equation and keeping these under control is a priority among developers as indicated through our Developer Economics surveys. Development costs may creep because of additional quality controls, marketing spend etc. Deriving platform value The analysis presented above touches on just a few of the indicators that determine the performance and value of a platform and is by no means complete. In our effort to model platform performance, we’ve identified around 40 KPIs, i.e. indicators relating to how platform stakeholders derive value from a platform. Building a model for platform value that takes into account all these indicators is of course non-trivial as not all KPIs are readily available or easily measurable and the weight of each KPI on the overall platform value is difficult to establish. So, to start with we’ve identified six KPIs that we consider important to the health and viability of an ecosystem and scored the two major platforms across these KPIs. While these numbers are important to different stakeholders in the app ecosystem, it is not obvious how much each of these contributes to the overall value of a platform. So while monetisation is better on iOS, developer mindshare is higher on Android, suggesting that reach is more important than revenue. At the same time, developers on iOS earn $7.4 per million users while developers on Android earn just $2.11 per million users, suggesting that developer value increases much faster on iOS than for Android for each new user added. This is an active area of research that we‘ll continue reporting on. Meanwhile, do let us know your thoughts and which factors you think are most important when considering platform value. What have we got right? What have we missed? Andreas @pappasandreas #Android #ios #mobileecosystem

George Voulgaris, Business Partner, presents Developer Economics 2013 and Insights on Private Data on the Cloud at the FIA2013 conference in Dublin on May 9th and May 10th. Get in touch for a meeting!