Look Ma, no apps, just messages

The fact Donald Rumsfeld is now in the app business is not the only reason to believe that mobile apps have reached a plateau.

look_ma_no_apps

The mobile app industry, it seems, is settling down: Android and iOS have formed an entrenched duopoly, the same few familiar publisher names dominate app store rankings, while the rest are fighting for every app install. But…

Just as mobile app industry starts to mature, things are about to turn upside down again

The days when almost every mobile use case required a dedicated mobile app may soon be over. As it looks, fancy graphical user interfaces are about to give way to spartan-looking messaging bots.
Such messaging apps as WhatsApp, KakaoTalk, Viber, Weixin, LINE, consistently lead in usage and sessions per app. Mark Zuckerberg, Facebook’s CEO, acknowledged in 2014 that:

“Messaging is one of the few things people do more than social networking.”

Messaging apps trained hundreds of millions of people to use a text-based user interface to message their friends and family. Now this user interface paradigm is being extended into communication with brands, companies and services. At the same time, [tweetable]messaging apps are transforming into messaging platforms[/tweetable].

The transition to a conversational paradigm is already in full swing in China. Weixin (known as Wechat outside China) allows users use the messaging app to hail a taxi, order food delivery, buy movie tickets, play casual games, check in for a flight, send money to friends, book a doctor’s appointment, get banking statements, pay the water bill, find geo-targeted coupons, search for a book at the local library, get updates from their kids school, get a loan, donate to charity, and even participate in court proceedings.

In 2010 reaching mobile users was all about apps. In 2016 messaging platforms emerge as the next frontier in tech after apps, social and the web itself.

Facebook is the undisputed leader in messaging platforms – Outside China

Facebook Messenger and WhatsApp (owned by Facebook) have amassed 800 million and 900 million monthly active users respectively, becoming the largest messaging platforms second only to SMS which has 3.8 billion users. Both Messenger and WhatsApp are shifting their business models from person-to-person messaging to B2B2C, that is helping businesses to interact with mobile users.

This is very worrying news for Google’s B2B2C business. Hangouts, Google’s own messaging app, failed to make a dent and win substantial user base. Surprisingly, this is despite that the app has over 1 billion installs – every Android handset maker has to pre-install Hangouts together with Search, Gmail, Google Maps, YouTube and other Google apps. However few people use the app – Most Android users don’t even know that the Hangouts app is installed on their handsets.

Apple can potentially become a player in messaging platforms with its iMessage service. However, learning from the history of BlackBerry Messenger (BBM), Apple will need to make iMessage available on Android to provide comparable user reach. Coincidentally, Microsoft is a ‘no show’ at the messaging party, despite having had a head start with the Skype acquisition – another miss for the Redmond company.

Calling all chat bot developers

Facebook has began turning Messenger into a B2B2C channel by working with a small number of partners, that includes Uber, Hyatt, Walmart, and KLM airlines, as well as smaller e-commerce company JackThreads and startup Assist.

There is no doubt that as soon as the Messenger SDK is ready for the prime time, Facebook will make it available to all developers. Today messaging startups, such as Operator, Agent Q and Mezi in shopping, Magic in virtual assistants, Digit in personal finance, Pana in travel, have to either use SMS or build their own messaging apps. When Facebook opens the Messenger SDK (and presumably WhatsApp later) we will see a burst of innovation with all these startups moving to the platform with hundreds and thousands of new developers joining them.

The shift from apps to messaging platforms brings upon new opportunities to developers. They can innovate in creating engaging user experiences without fancy graphics, and leave behind the issues of dreaded App Store approval, app updates and OS fragmentation. This excellent post by Meekan, a calendar assistant bot, gives a glimpse on what it takes to “cheat on the Turing test”.

Moreover, building conversational bots costs less and takes less time than building and maintaining apps for iOS and Android platforms. This will allow developers to iterate much faster and discover new messaging use cases we just cannot imagine today.

We at VisionMobile believe that much like in mobile apps [tweetable]developers will be the kingmakers of the messaging era[/tweetable] – We will begin tracking the experience of messaging bot developers in our upcoming 11th Edition of the Developer Economics survey.

This time the developer-led innovation will shift from the walled gardens of Apple App Store and Google Play the the walled garden of Facebook. Discovery, recommendations and monetisation of messaging-based services will be controlled by Facebook in a sort of a messaging bot “app store”. How exactly such an “app store” will look like it’s too early to say. For example Slack, the messaging leader in the enterprise, takes the traditional app store approach for showing users all the bots and integrations available on the platform. (I’m not convinced that this is the only way – I’d like to see something as friendly as Meekan to help me connect with the right services.)

While many questions remain, it’s clear the tech industry is ready to move from the “there is an app for that” world to the “there is a bot for that” future.

— Michael

Emerging developer opportunities in Enterprise & Productivity apps

[Andreas Pappas shares our latest findings, from our Business & Productivity Apps report which takes a look at developer opportunities created by emerging trends in enterprise mobility (such as bring-your-own policies and mobile SaaS) and professional and vertical app markets (e.g. healthcare apps). This market was worth $28 billion in 2013 and is set to grow to $58 billion by 2016.]

Enterprize_developers_illustration_HD

[Want to help us with data for our reports? We’ve just launched our latest Developer Economic survey – take the survey and have your say on the latest trends]

[tweetable]Apps are changing the way people communicate, work and play[/tweetable]. App development has grown into a huge industry, that we estimate to be worth $67 billion in 2013. We expect the app economy to more than double in size by 2016.

Most of the publicity and media spotlights currently fall on superstar consumer apps like Angry Birds or Candy Crush Saga and communication apps like WhatsApp. These success stories have certainly highlighted the massive scale and revenue potential of mobile apps, reaching from zero to tens of millions of users in record-breaking time.

At the same time, a growing audience of prosumer and business users depend on Box, Evernote and Trello to help them be more productive in their work. Enterprises are now allowing employees to use the apps they love at work, inside the corporate Intranet. Organisations of all shapes and sizes are integrating mobile apps within their business processes. This mobilisation creates a demand for off-the-shelf or custom mobile apps and services, translating into new and bigger opportunities for mobile app developers.

Most app developers currently target consumer app markets (think games and lifestyle apps) but they could be missing out on opportunities in the enterprise (aka business & productivity) market. Our research indicates that the business & productivity app market, is not only growing at approximately the same rate as the consumer app market but is also less congested, and offers better revenue potential, for more developers. Read the report to find out more.

_11

Consumer vs. Enterprise & Productivity apps: how do revenues compare

App publishers that target business and productivity markets have a much better chance of generating sustainable revenue than those targeting consumer markets, with just 32% of them below the “app poverty line” ($500 per app per month) compared to just under half of consumer-focused publishers (48%). At the same time, [tweetable]publishers that target businesses or professional users have a much higher chance to generate very high-revenues[/tweetable]: 16% of those targeting the business & productivity market generate revenues exceeding $500,000 per app per month, compared to just 6% among consumer-focused publishers.

_5

While consumer apps and particularly games (e.g. Angry Birds, Candy Crush Saga) can generate extraordinary revenues, it is quite clear that this is not the case for the vast majority of developers that target consumer markets. Business & Productivity apps allow developers to build a sustainable business around more solid business models with recurring revenues from a loyal customer base.

As bring-your-own policies and enterprise app stores become increasingly popular among businesses, the market and the opportunity for developers is likely is set to expand in the next three years.

Which platform should you prioritise if you build business and productivity apps?

While Android is dominating the consumer market in terms of market share, iOS maintains a healthy lead among professional and business users. Data provided by enterprise cloud content platform Box, indicates that 94% of their tablet users are on iPads, while enterprise mobility management services provider Good Technology indicates that 54% of enterprise smartphone activations came through iPhone devices in Q4 2013. It is clear that Apple has an edge in the business device market and this is also reflected in revenues generated via iDevices: VisionMobile estimates that revenue generated via iOS devices accounts for at least 60% of the total revenue in the business and productivity market.

_9

For developers that target the business & productivity sector it makes sense to prioritise iOS for development over the other platforms they develop for. However, there are several considerations to take into account such as integration with existing enterprise services, which may call for an HTML approach or the specific market that you target.

Where are the opportunities in the enterprise app market?

There is an inherent unpredictability associated with the future use of apps and it is exactly this unpredictability that empowers developers to create innovative apps that continue to redefine whole markets and industries. Nevertheless, we can still identify a number of areas that currently attract considerable attention among businesses and where we see future value being unleashed in the business & productivity market:

Vertical apps
Specialised industry apps such as healthcare, real estate, finance or automotive. Vertical specialisation provides a great opportunity for differentiation and for building strong brands as the app economy diffuses into every single industry. Existing industry stakeholders can leverage apps as a differentiation strategy against “un-apped” competitors, integrating apps and exposing APIs across their product offerings. For independent developers, specialisation is a means to capture a niche and survive the discoverability labyrinth.

Productivity/BYO
Apps that cross the boundaries between private-use and work-use, such as storage, lists, calendars, office-type apps are key drivers behind the consumerisation of enterprise IT. Once into an organisation or an enterprise app store, such apps can spread rapidly within organisations.

Mobile SaaS
Software-as-a-Service, delivering CRM, HR, ERP, BI services to small businesses and large enterprises is a booming sector. Mobile apps extend these capabilities much further by allowing anytime/anyplace access to these core business services.

Custom apps/services
Bespoke mobile solutions delivered outside of app stores will continue to take the lion’s share of revenues within the business and productivity app market. As we discussed, the dominance of this model will erode during the next few years as app store purchases increase among enterprises.

MDM/MAM
Apps and services that tackle security and complexity of the decentralised IT department are already essential for any enterprise that adopts BYO policies. More sophisticated app & device management models, that tackle some of the key issues associated with this trend (e.g. managing private/work services, remote deletion of work content) will continue to be hot areas in the next few years, catering to an increasing number of use cases.

Download our free “Business and Productivity Apps” report to find out more about the developer opportunity in this market and the reason you should be developing business and productivity apps.

Have your say in Developer Economics research
Help us continue bringing you great insights about the app economy and app development. Take part in our 7th Developer Economics survey that is launching today! Help us break our earlier world record of 7,000 app developers that took our 6th survey. Take part, spread the word, win prizes and help us do great research !

App trade: a global opportunity

As we launch our new Developer Economics survey [UPDATE: Survey now closed – results out Jan 2014], Senior Analyst Andreas Pappas quantifies the international dimension of the app economy to visualise app trade routes. With barriers to international expansion disappearing, today’s app economy knows no borders. But almost 50% of developers are not yet crossing those borders.

VM87_AppsTrade

One of the things that make app development attractive to developers is the relatively low effort involved in selling apps across international borders, compared to other forms of international trade. The low barriers to selling apps internationally make app development attractive even in regions where smartphone penetration and app consumption has yet to reach a level that can effectively support local app development. This is the case in Asian countries with smartphone penetration below 20%, compared to over 50% in Western Europe. To some extent, app development is even more attractive in Asian regions, as labour and other costs are lower, compared to western app economies. Continue reading App trade: a global opportunity

Web Sites vs. Web Apps: What the experts think

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.

Web sites vs. web apps

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? Continue reading Web Sites vs. Web Apps: What the experts think

Developer Economics: App market forecasts 2013-2016

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.

web_Forecasts

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. Continue reading Developer Economics: App market forecasts 2013-2016

Which apps make more money?

[How do app developer revenues vary by country, or platform? Does the number of platforms make a difference to app revenues? Which models bring in the most revenues? We revisit our November analysis of app monetisation with more insights from our Developer Economics 2013 survey across 3,400+ developers – while launching our latest survey, which is available here]

New Developer Economics survey

Back in November, we looked at which apps make money based on research on how app revenues vary by platform, app category, country and more. In this article we update our analysis on app monetisation based on the latest research from Developer Economics 2013 across 3,400+ app developers, including analysis that did not make it into the report.

We ‘re also proud to launch our very latest Developer Economics survey, which reaches across thousands of app developers and provides the data for our famous state of the developer nation reports. Thanks to the sponsorship by BlackBerry, Mozilla, Intel and Telefonica it possible to provide these reports and additional insights, for free, to the entire mobile community.

Take part in the survey, spread the word and help us drill deeper into the app economy and what makes it tick. We have prizes aplenty for developers, with 7 devices up for grabs (one iPhone 5, two Samsung Galaxy SIII, two Nokia Lumia 920 devices and two BlackBerry Dev Alpha handsets) – plus an AR Drone 2.0, a Nest Learning Thermostat and a Nike Fuel Band for participants who also subscribe to our developer panel. Last, but definitely not least, our friends at Bugsense are giving away one month of free crash reporting to each and every participant.

[ab_testing prettylink=’blogDS13′] Continue reading Which apps make more money?

The changing landscape of app discovery

[The explosive growth of app ecosystems is creating serious bottlenecks in app discovery that only popular apps can overcome. Having 700 thousand apps is great for platform vendors, but not so great for developers, whose apps are lost in the heap. Andreas Pappas takes a look at the app discovery problem and considers whether social discovery is a better solution than the alternatives available today]

This article is also published in our newly launched Developer Economics Portal – where you can find more solutions to the app discovery issue.

VisionMobile - The changing landscape of app discovery

One of the greatest marketing challenges facing developers is being discovered, i.e. breaking through app store congestion and in front of user eyeballs. With Google Play and App Store now reporting over 700 thousand listed apps, browsing through these is ineffective, if at all possible. In fact, large app stores and the entire mobile application space are increasingly resembling the web when it comes to discovering content: it’s a jungle out there. Continue reading The changing landscape of app discovery

Monetising apps: Lessons from the music industry

[VisionMobile analyst Stijn Schuermans muses about the similarities between the app economy and other businesses like FMCGs and music. What can app makers learn from other industries and how can these lessons help developers monetising apps?]

In a recent post on our newly launched Developer Economics portal with facts and insights for app developers – build.developereconomics.com – colleague Mark Wilcox likened the app economy to a retail business:
In the early days of relatively empty app stores, simply launching a good product was often sufficient to get noticed and soar up the store charts. However, as with any fast-moving consumer goods (FMCG) business, the value within apps has shifted from the contents (the functionality) to the packaging (the user experience) and marketing. Continue reading Monetising apps: Lessons from the music industry

Which apps make money?

[Which apps make money – and how? Andreas Pappas takes another look at the results of VisionMobile’s Developer Economics 2012 survey and comes up with interesting new insights on app monetisation: how does app revenue vary by app-category and by country? Is there a correlation between time spent developing an app and they money it makes?]

VisionMobile - which apps make money

In Developer Economics 2012 we discussed app revenues and how they vary across platforms. We found that overall, around half of all app developers that are interested in making money did not earn a sustaining income, i.e. they were below the “poverty line”, which we drew at $500 per month per app. Of course the real poverty line will vary widely across countries and regions: while $500 per month may not be enough for a San Francisco-based developer, it could be more than enough for a developer based in Bangalore where average living cost is less than a third, according to Numbeo. Continue reading Which apps make money?

Ambient intelligence: how well does your phone know you?

[Did you ever wish that your handset understood you better and you didn’t have to tap, type & scroll to tell it what you want it to do? Well, that moment may not be too far away. VisionMobile Senior Analyst Andreas Pappas discusses the future of ambient intelligence and the way handset evolution has brought us closer to that vision.]

“PlaceMe” is not an app; not in the traditional sense. You don’t really interact with it and you don’t tell it what to do. It will sit there quietly, in the background, observing you, learning about your daily routine and keeping a record of everywhere you’ve been. Continue reading Ambient intelligence: how well does your phone know you?