Application Marketplace

In September 2009, Apple announced that more than two billion applications had been downloaded from its App Store. With more than 100,000 applications available, Apple has transformed the mobile phone market by dramatically increasing consumer spending on applications and successfully shifting independent developer mindshare toward mobile application development. By the end of 2009, Google Android's open platform was reported to have over 20,000 apps in the Android Market online store.1

Mobile applications are not new. Even in the late 90s, mobile development was considered to be a hot market. While there were independent application developers and most of the high-end phones supported the installation of applications, the process of application install was awkward and most end users did not add applications to their phone. Examples of early smartphone and PDA devices from this era included the Apple Newton Message Pad, Palm Pilot, Handspring (and later Palm) Treo, Windows Pocket PC, and others. Almost all mobile developers worked directly or indirectly for the carriers.

The iPhone revitalized the landscape for mobile application development. Apple created an easy-to-use interface for purchasing and installing third-party applications, and more importantly, promoted that capability to their users and prospective customers.

Smartphone operating systems actively innovate to keep up with advances in hardware and ease development with improved tools and APIs. As we've seen with the iPhone App Store, often the most significant innovations are not purely technical. The App Store reduced barriers to application development by providing easy access to distribution. Unsurprisingly, people develop more apps when there is an accessible market and distribution channel. Google's App Market, Blackberry App World, and Windows Marketplace for Mobile are likely to drive the success of existing applications for those operating systems and draw new developers as well.

Increase in Mobile Usage and Trend Toward Smartphones

Six in 10 people around the world now have cell-phone subscriptions, according to a 2009 UN Report,2 which surpasses the quarter of the world's population with a computer at home. Smartphones are still a small minority of mobile phones, but growth is strong and the numbers are particularly interesting when compared to computer sales. Mobile Handset DesignLine reports that smartphones represent 14% of global device sales, but Gartner projections note that smartphone shipments will overtake unit

1 http://www.techworld.com.au/article/330111/android_market_hits_20_000_apps_milestone

2 International Telecommunications Union (a UN agency), "The World in 2009: ICT facts and figures," http://www.itu.int/newsroom/press_releases/2009/39.html, 2009.

sales of notebook computers in 2009 and that by 2012, smartphones will grow to 37% of mobile device sales.3

sales of notebook computers in 2009 and that by 2012, smartphones will grow to 37% of mobile device sales.3

Looking at how people use their mobile phones today suggests patterns of behavior that will drive smartphone sales in the future. Increasingly, people are using their phones for more than phone calls: web browsing and the use of other mobile applications are growing. Market researcher comScore reports that global mobile Internet usage more than doubled between January 2008 and January 2009.4 In Africa, a recent sharp increase in mobile phone adoption is attributed to the use of phones for banking and sending money to relatives via text messaging.

Even lower-end mobile phones typically bundle web browser, e-mail, and text messaging, but the power of the smartphones enables a wider array of applications. Smartphones are not just little computers that fit in your pocket. For many applications, they are actually more powerful devices than a laptop due to their built-in capabilities of camera, connectedness, and geolocation. Business people who can afford a laptop often prefer the longer-lasting battery power and portability of the smaller device. In an Information Week article, Alexander Wolfe collected real-world use cases of businesses adopting smartphones for applications that used to be only accessible with a desktop or laptop computer:

At Dreyer's Grand Ice Cream, the Palm Treo 750 is being used by some 50 field sales representatives to access the company's back-end CRM database.

The company's field-sales reps tried laptops and tablet PCs, but their battery life was too short and rebooting took too much time on sales calls, which number 20 to 25 a day, says Mike Corby, director of direct store delivery. Dreyer's reps also found the laptops to be too bulky to tote around, "not to mention the theft worries with notebooks visible on their car seats."

At Astra Tech, a medical device maker, some 50 sales reps access Salesforce CRM apps on their smartphones. "Salespeople say they now check yesterday's sold or returned products plus the overall revenue trends, five minutes before meeting with a customer," says Fredrik Widarsson, Astra Tech's sales technology manager, who led the deployment on Windows Mobile smartphones (and is testing the app on iPhones). "Another interesting effect is that once a salesperson is back home for the day, the reporting part of their job is done. During waiting

3 Christoph Hammerschmidt, "Smartphone market boom risky for PC vendors, market researchers warn," http://www.mobilehandsetdesignline.com/news/221300005; jsessionid=lJYPKFPGNOGElOElGHPCKH4ATMY32JVN, October 28, 2009.

4 Dawn Kawamoto, "Mobile Internet usage more than doubles in January," http://news.cnet.com/830l-l035_3-l0l97l36-94.html

periods throughout the day, they put notes into the CRM system, using their smartphone."5

In a recent article by Gary Kim, Forrester analyst Julie Ask identifies three things as the killer advantages of mobile devices: "immediacy, simplicity, and context."6 When those are combined with usefulness, we're going to start to see a different flavor of software application emerge that will transform the way we use mobile phones. The use of software applications as "computing" will become archaic. The age of software as communications medium will have arrived.

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