The crux of the mobile developer conundrum: Forget the 99% without iPhone

After reading my diatribe last night (“http://www.mobileindustryreview.com/2009/03/mobile_network_app_stores_utter_utter_rubbish_today.html”), regular reader Terence contributed this point in the comments below:

Something else to consider – there are no shortage of old, crap phones. Should we (as developers & networks) cater to them or wait until they all upgrade to an iPhone?

The answer is simple: Wait ’til they upgrade to an iPhone. Or Android or Ovi capable handset. Anything with a decent path-to-discovery-purchase-and-use.

That’s it.

There is no other answer.

If you’re using a piece of shit Motorola, stuff it. Lump it.

Not unless a mobile operator is going to pay you to develop for other platforms. The development cost, the discovery and marketing costs — usability cost (“I downloaded it, now, how do I find it on my handset?”) — they are just too high.

That’s why 25,000 iPhone applications have been contributed to the App Store and why4.7m applications are being downloaded per day on the iPhone. There’s a route to cash.

There are problems with the iTunes App Store. It’s not all roses. But there’s a clear path to cash.

Everything else is 100% bollocks. Agree?

What am I missing?

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  • http://www.phonething.com Alex Kerr

    You’re missing this: http://www.appleinsider.com/articles/09/03/07/would_be_iphone_developers_pulling_their_hair_out_by_the_roots.html
    and this: http://arstechnica.com/apple/news/2009/03/apple-has-no-clue-whats-going-on-with-dev-contracts.ars

    and (in this article) you’re ignoring the promise of Ovi store to at least be available on 300-400 million phones new a year (ignoring all the existing users that will be able to install the store) and offer multiple advantages over iPhone, e.g. not being limited to just apps.

    And say I as a developer make some AMAZING new app, and drop it into the ocean of the iPhone app store – care to tell me how exactly any significant amount of people are ever going to find it, without me spending lots of money on marketing? Money I haven’t yet had from the app which you promised me was going to be so successful? ;-)
    I propose the motion that only a very very few iPhone app developers make any significant money (e.g. enough to pay the bills) from iPhone appstore these days.

  • http://geekyouup.blogspot.com geekyouup

    In whole-hearted agreement with you on this one Ewan, if a mobile website can be provided for the lower end phones then fair enough, but my application developement time is now reserved for the high end. Even though everyone and their mum are releasing app stores and widget stores for their devices this year, I don't think it'll shift my perspective.

    Of course being luckily enough to own and run a high end device must add bias.

  • http://www.mobileindustryreview.com Ewan @ MIR

    I'm not ignoring the promise of the Ovi Store. See my response on the other thread. Ovi looks promising.

    Make an iPhone app for caravaners.

    Get a write-up about it in the relevant magazines and blogs. Get a bit of support from the various associations.

    Bill it at £6.99. And it lists and rates every single camp site or something like that.

    If you sell 50,000 over 6 months you've made £349,500. Give 30% to Apple and you walk away with £249,650.

    The caravan app idea might not be entirely appropriate — the vast majority won't be using iPhones. But the concept stands.

    If you only shift 10,000 downloads across the year, you've netted 70k gross.

    if you only shift 1,000 downloads in a year, you've netted 7k gross. Is that worth it for a few days/hours of tinkering? Probably — for a lot of developers anyway.

    You don't have to take out full page ads in The Telegraph for 6 weeks to get your app exposure. It's all about targeting the right audiences. Do it correctly and word-of-mouth will help out a heck of a lot.

    But we digress Alex — into a different topic.

    My point is that if you're an App developer — like geekyouup below — you put your efforts into iTunes. And when (if) Ovi proves to be workable, you'll look at that. And you'll welcome the hundreds of millions of new potential customers.

  • steve green

    I think you’re on the money here Ewan – as an iphone user I download my first full price game ever, Star Wars Force Unleashed for £3.49. Impressed with the free ‘lite’ version I’d download for nowt earlier.

    I down I would have taken that leap of faith if paying to download a game to a shit Motorolla.

  • http://shkspr.mobi/ TerenceEden

    Well, anyone who runs a mobile site will tell you that there a lots of people still using ancient devices (GX-10 etc). They've had 6-odd years to upgrade – but they haven't. Why?

    a) Price. A basic GPRS colour screen device can now be had for ~$25. That's a good price point. We'll have to wait another 5 – 10 years before the iPhone / G1 / Pre level hardware gets there.

    b) By the time everyone and her mother have a $25 iPhone – all the cool kids (you, me and developers) will have moved to the iPhone 7G, Nokia Inquisitor and Dell DeathStar and will be urging them all to upgrade again.

    c) Not everyone wants to upgrade. The Nokia 6300 – or whatever – is a perfectly good S40, it does a bunch of stuff reasonably well. The people who have it do buy games, ringtones, applications, etc – there aren't a great deal of apps out there – but they are being purchased.

    So, given that a few billion people won't be upgrading their phones any time soon, do you
    1) Focus on the <1% of people with an iPhone and end up competing over a few million customers with a few hundred thousand developers?
    2) Widen your aim?

    I get that the iPhone and the Android are wonderful to develop for. They've both done the job that Nokia should have done *years* ago. But because they're easy to develop for, you see a huge influx of competitor developers.

    I turn your argument back on you. Your potential customers are using a piece of shit Razr. Lump it.

    T
    [This message not endorsed by Vodafone, MI5, the KGB or any of my other employers]

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  • http://ymb.jaiku.com Mike Bradshaw

    Teemu Kurppa went over this topic at the recent MobileDevCamp in Helsinki. slides can be found here – http://dirtyaura.org/blog/2009/03/10/mobiledevc

    Basic message, do iPhone now (as that is where the money is), but be aware of the other platforms or makeing web services.

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  • http://www.mobileindustryreview.com Ewan @ MIR

    I'm thoroughly enjoying the debate Terence.

    In the context of commercial reality, I'm right. Your argument simply doesn't stack up.

    In the context of best practice in mobile, you're right, and my argument is entirely limited and blinkered.

    Answering your points:

    a) No response to this one. I agree with your statement.

    b) Urging everyone to upgrade to a 7G iPhone. No. I imagine I'll be encouraging promobs to consider an upgrade, if the device is any good. But from a developer point of view, provided you're on the iPhone 2G or 3G, you can at least PAY for my applications, download them and experience them in a nice manner.

    c) If you don't upgrade from your 6300, no problem. There's a reason there aren't a great deal of apps out there for these handsets Terence. Commercial reality. No one wants to pay to create apps that can't easily be monetised on a 6300 series device.

    Your statement: “Your potential customers are using a piece of shit Razr. Lump it.”

    Yup. That's exactly what every single one of the developers of the 25,000 iTunes App Store applications have done Terence. They've lumped it. They've faced reality: Developing for a Razr, a 6300, whatever — it's an unmitigated disaster. It always has been and it's going to continue in that manner. Ovi is a bright light at the end of the tunnel for the s60 crowd.

    Meantime, widen my aim? Show me the commercial reality and I'll widen my aim. Is [Operator Name] going to give me 100k to support me developing applications for their >98% customer base using rubbish handsets? Unlikely ergo I'll focus my efforts for best commercial advantage.

    (For those reading who might not know — I'm writing as though I'm an App Developer — I'm not — I'm just putting across the argument)

    So right back at you Terence. Your argument is 100% incompatible with commercial reality. The millions using 6300s and Razrs can't pay me for my work. They can't discover my app easily, they can't find it when they've downloaded it, the experience is pretty rubbish … AND they can't pay me.

    But I like the concept of your argument from a wouldn't-it-be-nice viewpoint.

    So Terence, argue with me. Prove me wrong. Show me – and the thousands of other developers reading with eager excitement. They're all sat there looking at Vodafone, o2, Orange and T-Mobile and seeing them naked. The emperor has no clothes. At least, that's what we're thinking. Show us the money Terence!

  • http://whatleydude.com James Whatley

    “And when (if) Ovi proves to be workable, you'll look at that. And you'll welcome the hundreds of millions of new potential customers.”

    When. IF.

    Exactly.

    And as for 'the existing users that will be able to install the (ovi) store' ?
    Yeah, because Symbian handsets are renowned the world over for the simplicity of *that* process…

  • http://blog.mjelly.com jamescoops

    Yes, iphone is an amazingly powerful platform.

    The success of services like itsmy.com, mocospace, mig33, mxit suggest that it is possible to do well off the back of other devices. I reckon a lot of mocospace's traffic is Razrs…

  • http://shkspr.mobi/ TerenceEden

    Quick reply, because it's late & I've had a glass of wine :-)

    People with non-iPhones are quite adept at downloading games, paying for them, and then finding them on their handsets. I can't tell you how many (I'm not at work and the details are probably confidential) but any of the big game developers will tell you that there's a market for them.

    Shozu, Qik, Kaywa, etc all seem to be surviving. They were doing well before the iPhone, they're doing well now. Look at Handango, GetJar, Mosh and the like. There doesn't seem to be a shortage of developers or downloaders there.

    I'm not a businessman – and I haven't been a developer for a long while – but I'd rather take my chances with the HUGE number of non-iPhone users than scrap it out with everyone chasing the same 10 million customers.

    Look, I know that the iPhone is as sexy as hell – it's even come close to seducing me – and it has a wonderful development environment. It also has the the twin killer features of PAYING developers and making the download experience easy (ish). Operators have to find a way of making ourselves as easy as Apple is to work with AND putting cash in developers' hands.

    But, let's look at this from a MNO perspective (which is pretty much all I have to offer)… Do I want
    a) A few deals with big companies with established support procedures, who will guarantee to debug their apps, and understand the realities of business etc
    b) Myriad of small developers, each punting the same iFart app, buggy as hell programs (have you read some of the reviews on the app store?), all shouting at me every time I vary my procedures etc.

    Will we show you the money? Sure – just so long as you show us that it's worth our while.

    Look, the iPhone exists to sell Apple's hardware – including their computers (ever wonder why you need iTunes to activate your iPhone) – the fact that they make a small amount of money from selling apps and tunes is a nice bonus. They really want to sell hardware and they know that having cool apps helps that. Although I doubt anyone bought an iPhone just so they could pay 59p for a Magic 8-ball app….

    MNOs are not in the business of selling hardware – which is why our priorities have been different. We want people to use our network. Hence the Betavine API – http://betavine.net – and the GSMA ONE API – https://gsma.securespsite.com/access .

    Ok ok… maybe it was two glasses of wine*.

    T
    [Is this the official position of Vodafone, my employers? Hell no!]
    *Don't binge drink kiddies – it's bad for your health and you'll type incomprehensible gibberish into the Internet.

  • Steve

    My sentiments exactly.
    If everyone were still worried about what their website looked like on a 286 monochrome display machine the web would be one boring place.

    Same applies to phones. Out with the old, in with the new, if you dont keep up… too bad.

  • http://www.mobileindustryreview.com Ewan @ MIR

    I don't buy that. I don't buy that position at all. I especially don't buy the the 'will we show you the money' bit. That's there it all falls apart. That's where it takes months upon months of negotiation and contractual dancing in the dark.

    You said:
    “But, let's look at this from a MNO perspective (which is pretty much all I have to offer)… Do I want
    a) A few deals with big companies with established support procedures, who will guarantee to debug their apps, and understand the realities of business etc
    b) Myriad of small developers, each punting the same iFart app, buggy as hell programs (have you read some of the reviews on the app store?), all shouting at me every time I vary my procedures etc.”

    So what you're telling me is that as far as you're concerned, mobile operators should work with a a few big companies with established support procedures… and who 'understand the realities of business etc'.

    So what's the point of Betavine? Indeed are you saying that it's your position, Terence, that mobile operators SHOULD only ever work with 'big [developers] with established support procedures'?

    Next, to your point about Apple being a hardware seller. Of course. You said that 'the fact they make a small amount of money from selling apps and tunes'?

    Let's take apps alone. 4.7m downloads a day, right? 70% are paid for. That's 3.29m paid-for-apps, right? A day.

    Assume for the sake of argument that each app retails for an average of $3? That's $9.8m in gross revenue. A day.

    Factor that out across 365 days? We're now at $3,602,550,000 dollars. 3.6 billion dollars. Allow for a 1.4 dollar to 1 pound ration and that equates to approximately 7% of Vodafone's £35.5 billion revenue last year. Now, let's take a few liberties with the figures and round them down to allow for inaccuracies in the above working out.

    Let's just assume the annual figure is $2.5 billion in gross revenue from the app store.

    30% of 2.5 billion is $750 million. In more or less free cash flow. The are costs associated with the distribution and so on.

    $750m isn't 'a nice bonus', it's a rather good one. Enough to have an effect on any balance sheet.

  • http://www.phoload.com Jamie

    Out of the millions out there with older Java ME handsets, I believe a very small, but still significant portion of them do go to the effort of finding and downloading software. For example, on our Phoload app store, the Nokia 6300 and 3110 classic are actually among the most popular phones, right up there with the N95. Of course the software on Phoload is free, so how many would pay for apps is a different question… But those users are out there in numbers and actively downloading software, despite the barriers.

  • matthaus

    Hey Ewan, just feel like beating the same drum like I did recently at Enrique Ortiz' blog couple of days ago.

    What you are missing is my confusion around the app store model hype right now.

    Based on my exchanges with VCs/operators and observations (MWC) in recent weeks I find there is a hype around the app store model among the startup community which has little economic justification. This is a tough year for mobile startups and there’s little on the app store front which can change that for them.

    Mind you, I understand the enthusiasm of startups when they get into the Apple app store. At VentureBeat we get companies telling us every week that even though they’ve got 5% iPhone users they make up 30%-70% of the actual usage of their service. Getting into the app store is a powerful emotional moment of success for startup teams. VCs, however, have all seen this effect for months and it’s old news for them. To get more funding, startups rather need to answer the question “what’s next ?” VC funding into the consumer mobile segment has decreased in the last 9 months or so. Pitches based on the app store model rarely work, from my observations. If you present numbers like “if you sell 50,000 over 6 months you've made £349,500. Give 30% to Apple and you walk away with £249,650″ – that's a possible Angel or “lifestyle” investment.

    Pretty much anyone going for a company which may get funds from a VCs needs to look to develop their stuff independent of platform concerns. Based on my talks at MWC I don’t see how the app store model really changes the operator business in the next 12 months, either. Mind you, that may be my confusion (again!), though, as I continue to be surprised how different views on issues like this are in this industry ;) I talked to 6 operators and they all see different things happening and all react to these things differently. What I see, though, is that the business of device makers is changing. Their pitches to operators have become different, I’m told. “My device increases the sales of your data plan via apps/MSN” is becoming a winning formula for some device makers and their competition has to react. This segment of the industry will change a lot this year, imo.

    Just my 2 cents.

  • http://www.mobileindustryreview.com Ewan @ MIR

    You're absolutely right with your point about VC backed companies Matthaus. A few hundred thousand in revenue can be a brilliant, brilliant result for a team of two or three developers locked in a small office in the middle of nowhere, or for a lone developer. But if you've been given half a million or a million, as the VC, I'd be asking where the next five of those were… and when you're going to get bought by Google ;-)

    The depressing thing with the App Store concept is that it is fundamentally tied to the desktop. To successfully use an iPhone, 'end-to-end', you really need a desktop computer. A strictly limiting experience for the vast majority of mobile users who haven't ever owned a desktop.

  • http://www.mobileindustryreview.com Ewan @ MIR

    You make a good point Jamie. Some people on those handsets still do seek out applications. My biggest frustration is that application developers cannot easily monetise these actions.

  • http://shkspr.mobi/ TerenceEden

    ….and this is why I shouldn't post at midnight…. :-)

    What I meant to say way that in the past MNOs have preferred big deals. They're only now coming round to the idea of lots of deals with smaller players. The App store has shown them that there is a demand there.

    Think of it like Supermarkets. If you want to be on the shelves in Tesco, you either need to be a big brand or a supplier to a big brand. With the growing demand for more locally sourced produce, we're seeing supermarkets doing deals with smaller suppliers.

    Something that corner shops and markets had been doing for years.

    So, no, I'm not saying that MNOs should only work with other big companies – but that's the way they've been doing business for so long, it's hard to change. That's why we see experiments like Litmus and Betavine – to see if it is feasible.

    I desperately hope that it is feasible. On a personal level it would be brilliant to see an ecosystem flourish with the networks at the centre. I just worry that MNOs won't be able to move fast enough (I'm pushing as hard as I can!)

    On to the second point. I don't believe that those numbers are even close to right (staffing, credit card fees etc) but let's proceed as if they are.

    In 2006, Vodafone posted a loss of $32 BILLION. http://www.theregister.co.uk/2006/06/02/vodafon
    Sure, they're doing better now. But, Advocatus Diaboli, is all that effort justified for a puny 3/4 Billion?
    Vodafone's Data revenues alone, was £768 Million per quarter http://www.vodafone.com/etc/medialib/ims_q3.Par

    Yes, the $750 Million you posit would be a very nice bonus – and one I'd be proud to bring to the board. But is it an area an operator should be focusing on? Or should it be the responsibility of the manufacturers? Or independent shops?

    That's what the industry is wrestling with.

    (Personally, I think that operators should have been doing this long ago and they really need to pull their fingers out getting charging capabilities to independents. There should be heavy integration between phone, network and content – of course, then you get people screaming at operators for “crippling” the handsets….)

    Terence
    [Personal opinions only]

  • South77

    I realize I'm late here and not qualified to comment, but apps and app stores are maybe a little too narrow view of the the issue. I'd bet the UK operators make reasonable revenues from selling “content” to, say, Nokia 6300 users from their portals. 2 quid ringtones and J2ME games, that sort of thing.

    I personally *like* the current Symbian model where you just get apps from where ever you find them on the Internet, although I concede it would be good for mass-market uptake if they were organized into an Ovi portal.

  • South77

    I realize I'm late here and not qualified to comment, but apps and app stores are maybe a little too narrow view of the the issue. I'd bet the UK operators make reasonable revenues from selling “content” to, say, Nokia 6300 users from their portals. 2 quid ringtones and J2ME games, that sort of thing.

    I personally *like* the current Symbian model where you just get apps from where ever you find them on the Internet, although I concede it would be good for mass-market uptake if they were organized into an Ovi portal.

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