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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

July - 2011 - issue > Cover Feature

Mobile Apps Market: The Big Challenge

Hari Anil
Thursday, July 7, 2011
Hari Anil
The famous French romantic writer Victor Hugo once said, ‘There is nothing more powerful than an idea whose time has come,’ this stands true for Mobile Apps, it is a very brilliant idea and all it needed was the right time. Finally that time came and from the looks of it one can beyond doubt say ‘now is the time.’ Angry Birds stands as a testimony for this. If we go a decade back most of us might not have heard the phrase ‘Mobile Apps’, such a thing did not even exist then. Definitely there was application development in the back end but none that would attract the customer base as a whole, none that, even in the wildest of all dreams, would make a world of difference to the customers. Then came apple with its iTunes store and the rest were history.

To put things in perspective, let us take a look at Angry Birds. Developed by Rovio Mobile, it was first released for Apple’s IOS in 2009 and later in Android App stores. It has so far been the most downloaded app with more than 250 million downloads. Is it that magnificent a game or is there any other reason for this sort of success? No doubt on the quality of the game, still there is another factor that might have helped the game equally; the time it came out. The era of smartphones and high speed internet had just begun and this was giving app downloads a whole new dimension. According to a report by The Nielsen Company, by the end of 2011 the majority of mobile subscribers in the U.S. will have smartphones, good news for app developers.

Simultaneous to this enormous opportunity, a wave of challenges is also bubbling up. The challenges range from scarcity of available talent to lack of financial return, difficulty in retaining customers and more. Above all these, people seem to have this strange idea that unlike traditional software an app is a small piece of code that can easily be written. Well in reality an app is a full fledged software and requires equal amount of work if not more. Combine all these and we have a cutthroat market, to survive in which a company has to train itself to be a whole different animal. Let us look into some of the challenges faced by the players of the industry.

Monetizing Apps

The major dilemma for app developers is how to monetize their apps. In its report, ‘The State Of Mobile Apps’, The Nielsen Company stated that users of Apple App Store download one paid app for every two free apps they download, whereas users of Android Market and Blackberry App World stores are downloading more than 3.5 free apps for every single app they buy. Selling via app stores means sharing a major portion of the revenue, in some cases even as high as 70 percent, with the app store. On the contrary, offering free apps does not necessarily mean lack of financial return. By adding advertisements on free apps the companies are actually making money, so much so that at times this is more profitable than making the app paid. The scope for revenue for a paid app ends when the customer pays for it, but for the apps that follows the ad model revenue comes whenever someone clicks on the featured advertisement. For example, Angry Birds, when launched was a paid app in the Apple appstore but was launched in the Android market as a free app, and ended up making even more revenue from advertisements, more than $1 million a month.

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