Making sense of the mobile application development future

In the past month, a land slide of research on mobile internet usage and application downloads has hit the market. On smartphones, iSuppli has pointed out that Android will soon overtake Apple in terms of the number of handset it is available on, which is further backed by NPD which found that one in three US smartphones sold are Android devices.  It is only natural that Android will overtake Apple as the smartphone platform of choice given the much larger selection of devices, and also the fact that Nokia’s Symbian is losing market share (still to be seen whether the upgraded version of their platform will have an impact).

Yet, on application downloads, Apple’s iPhone is expected to rule for the next few years:

If you are an application developer, you should be pleased that other smartphone platforms are growing, as clearly making money on the iPhone is becoming very difficult to say the least, with the median expected revenue per app hovering around $700. Still, because developers have been frustrated with the difficulty of adapting their applications to a wide range of J2ME handsets, who also have shown poor download figures and offering horrendous business models, they have been looking to smartphones as the savior, which may not be a viable strategy.

The “iPhone” effect has no doubt been good in that it has forced mobile operator to be conscious about offering data plans, which is having substantial impact in some markets. Data from Spain indicates that 45% of users are accessing the mobile internet on a daily basis.  Given that Spain’s smartphone penetration is likely not to be any bigger than most western markets, this is clearly driven by good data plans by the operators, on pre-paid as well as post-paid plans. The fact that good data plans drives usage is no secret, as the success of H3G in their markets they operate with various services has proven that users will go online on their mobile regardless of how advanced their phone is.

So how are developers currently reacting to the market realities? If Millennial Media’s latest research is correct, the reaction shows a somewhat dangerous approach:

For US developers, this means that nearly half of all developers focus on the iPhone alone. Given the stark revenue expectations, this will all but spell death for the large majority of application developers. Why are developers doing this? Well, distribution for mass market phones (i.e. J2ME) has been extremely complex given the complex nature of distribution, high expenses in porting your application on hundreds of devices, poor business models, and lack of users actually using their phones for data:

A recent report from Vision Mobile talks about “developer mindshare” as the key driver, and J2ME as the leading platform clearly lacks this mindshare.  However, when asked for the reason for the choice of platform, developers answers do not match market reality:

Clearly, market penetration is related to application downloads, and this only shows that J2ME and Symbian have a huge gap to close – but the potential is simply enormous.  Smartphones are driving the push for data plans, on both post-paid and pre-paid plans, which will benefit all handset owners. As for distribution, app stores are popping up everywhere offering more attractive 70/30 type of business models, and several, like Sony Ericssons Play It Now and GetJar are well designed and focus on J2ME and Symbian, so the distribution aspect is gradually improving.  This somewhat mitigates the stronghold of mobile operators as well, who have often done a poor job selling applications. More choice for distribution and discovery, better revenue models, and increased awareness of the mobile phone as a data device will benefit the market as a whole – and purchasing apps over the next couple of years should hopefully become the norm on the majority of mobile handsets. Let me be clear – we are not there yet, as distribution is still complex outside of the top app stores, but it is getting there. I do not agree with Vision Mobile’s statement that “the exposure bottleneck is a new phenomenon in mobile”. Any J2ME developer will tell you that placement on the operator deck means everything for revenue. iTunes does not solve this – only more well designed app stores with well designed payment methods will. 

One issue that is not addressed by market forces though, is the complexity of development as perhaps the main drawback long term. Developers would be wise to invest in porting software to help them ease the cost of adapting their apps to various platforms, and start reconsidering their device strategy to start supporting mass market phones again very soon, as this opportunity is now coming within reach in many markets, not just in Spain.

On the flip side, device fragmentation only increases, as more platforms such as Samsung Bada and Windows Mobile 7 are launching. The main response, at least from Samsung’s side (I happened to attend the Bada launch in Sydney last week) has been to offer prizes to developers to entice them to support their platform. One has to question this strategy though, and wonder whether to instead of giving away USD 3m in prizes to developers, to distribute those funds among the top developers for iTunes to port their apps.

Either way, the space will be interesting to watch. As a veteran in the space, I still hope the day comes when J2ME apps will be downloaded in big numbers, as the market potential is enormous, but have been held up due to too many complexities – several of which are gradually disappearing…