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[Report] Developer Economics 2011 – Winners and losers in the platform race

[Who is leading in the platform race – and who’s lagging behind? Marketing Manager Matos Kapetanakis examines the flow of developer mindshare and discusses how success is measured in the app era – in part 1 of our 3-part blog series on our newly released Developer Economics 2011 report.]

Developer Economics 2011 – free download here – has been created by VisionMobile and sponsored by BlueVia.

Developers driving innovation

The role of mobile developers has changed dramatically over the past three years, from a lowly position as back-room engineers to the much-sought-after engine that drives mobile software innovation. Never before have developers, from big development houses to aspiring students to garage entrepreneurs, had such an enormous impact in mobile industry innovation and dynamics.

Handset manufacturers, platform vendors and even network operators (or carriers to our American readers) are competing over who’s going to build the biggest developer community, as success today is measured in terms of thousands of apps and billions of downloads. Platform and OS vendors are the most active in this game, trying to steer developer mindshare towards their platform and create a new plateau of innovative services, as well as a whole ecosystem around them.

So, which platforms lead the race and which are lagging behind?

The platform race

In the platform race for developer mindshare, there are some clear winners. According to our research, the developer mindshare is firmly flowing towards Android and iOS, with 67% of developers currently using Android and 59% using iOS.

These figures show a considerable increase since last year, with the two platforms climbing nearly 10%. In contrast, the â€˜old guard’ comprised of Java and Symbian are leaking developer mindshare.

However, the most surprising finding is the adoption of mobile web, i.e. the platform for apps written in HTML or JavaScript, which claimed the 3^rd spot in terms of developer mindshare, being used by over 55% of the developers. We do not attribute this to the ease of learning this platform (which has a deceptively steep learning curve, as you can see in the full report), but rather the influx of non-mobile developers to the industry. Also, mobile web is fast becoming the de-facto cross-platform choice for developers, especially now that Java and Flash are waning. In addition, there is a veritable host of HTML-to-native development tools that are helping HTML/JavaScript developers target smartphone native app markets.

More on Developer Mindshare in the full report.

It’s also worthwhile to take note of the Developer Intentshare, i.e. the platforms that developers are planning to use.

Android still reigns supreme, but the surprise comes in the form of Windows Phone, which is fast becoming a developer favourite. Despite lukewarm sales in 4Q10 and 1Q11, the newly revamped Microsoft platform has managed to gain the vote of developers.

This can be attributed to a number of reasons: First and foremost, Microsoft has actually released a competitive platform with a strong toolset. Also, the platform’s future seems bright, after the now-famous Finnish Deal. Finally, Microsoft has invested a lot of time (and money) into attracting developers, tapping into the Xbox and Silverlight developer communities to divert the flow of mindshare in their favour.

The inclusion of Chrome OS in the top 5 platforms in Intentshare is more a result of curiosity for Google’s dark horse platform – how will it stack up to other platforms? MeeGo also seems to be vibrant, which goes to show that strong developer communities go a long way in this software era.

In contrast, BlackBerry has lagged behind in Intentshare, suffering from fragmentation issues (see our full report for the surprising answer to which platforms are the most fragmented), as well as minor fixes to an aging platform.

Who’s lagging behind in the platform race? Symbian and Java have suffered the biggest losses in terms of developer mindshare. Nearly 40% of developers currently using Symbian and 35% of developers currently using Java ME are planning to abandon the platforms.

No surprises there, especially in the case of Symbian, which carries an expiration date, despite Nokia’s slow transition to the WP platform. Java’s loss of mindshare is less expected, especially considering the platform’s reach as global sales are still dominated by feature phones – but developers are not sticking around for that.

Palm’s platforms are also being rapidly abandoned by developers, since Palm is all but dead and HP has still to ship its first webOS handset.

What’s in a platform?

How do developers make that all-important decision of which platform to select? Well, according to our research, the biggest driver in platform adoption is large market penetration – a sentiment shared by 50% of our respondents, irrespective of the platform they spend most of their time on.

But what exactly is market penetration? A platform’s installed base is an important aspect – i.e. just how many actual handsets can run a given app – but that is not all. Penetration is also measured in terms of a platform’s ability to reach users and that is also a factor of how and where that content is available. – a centralised distribution and discovery point, such as an app store, accessible by mobile devices, tablets and PCs goes a long way towards providing developers with a direct access to their customers.

Proving that there’s more to market penetration than a large installed base, we present the case of handsets sold vs. apps. There is a large discrepancy between the number of handsets sold and the number of apps available on a given platform.

In an app economy with close to 1 billion [Update: million] apps, more than half of those are concentrated on two platforms: iOS and Android. It’s easily apparent from the graph that vastly more pervasive platforms in terms of total shipments, like S40 and Java claim just a fraction of the app pie. Granted, this is a smart-centric game, but even a pervasive smartphone platform like Symbian cannot much app to the two app moguls.

Do apps mean money? Not directly, but it’s no coincidence that 2011 marks the first time Apple overtakes Microsoft in terms of revenues and Android rushes past the finally burned-out Symbian platform in terms of shipments.

-Matos

Want more Developer Economics?

And for those of you who still haven’t done so, don’t forget to download the full report!

[Survey] Developer Economics 2011: The evolution of app development

[Developer Economics 2011 is here! As we launch our new survey on all things developer-related, Marketing Manager Matos Kapetanakis looks back at the 2010 report and examines the major events that have shaped mobile development in the past 6 months]

The evolution of Developer Economics
Last July we published the definitive mobile developer research report: Developer Economics 2010, dubbed by TechCruch as “one of the most profound…to date”. Our report delved into all aspects of mobile application development, across a sample of 400+ developers segmented into eight major platforms.

We’ve just launched the follow-up to this research report: Developer Economics 2011, once again made possible thanks to BlueVia, the global developer platform from Telefonica that helps developers take apps, web services and ideas to market. Our goal is to see how the dynamics of the developer world have changed since early 2010 and to provide more insights into app marketing, monetization and many other factors.

Join the survey or help spread the word! This year we â€˜ve also secured a prize for each of the first 400 developers; 10 hours free testing time on DeviceAnywhere’s 2000+ handsets. UPDATE: Thanks to overwhelming support, all 400 free testing time prizes have been awarded by DeviceAnywhere. Of course, the $1,500 Amazon voucher is still up for grabs!

Major shakeups of the mobile industry for H2 2010
So, what’s changed since our 2010 research? The mobile industry is an ever-evolving landcape. In the past 6 months we have seen the Symbian Foundation close shop, with Nokia hoping that the as-yet untested MeeGo project will carry their smartphone banner. We have also seen the stellar rise of Android, zooming past Apple’s iOS and BlackBerry and becoming the no2 smartphone platform behind Symbian.

In the handset OEM arena, we have seen more shakeups in 2010 alone than in the 10 years preceding it. Apple and RIM have overtaken some of the traditional handset OEM powers (Sony Ericsson, Motorola, LG) and claimed a spot in the top 5. According to some estimates, ZTE could join them soon.

Moving forward, Developer Economics 2011 is looking at how the key metrics of mobile development have changed in the last year.

The migration of developer mindshare
One of the major findings of our 2010 report was the migration of developer mindshare away from the â€˜old guard’, i.e. Symbian, BlackBerry and Java, towards the new powers of the realm – iOS and Android. According to our research, nearly 60% of the 400+ respondents had developed apps on Android. Apple’s iOS took second place, with more than 50% of respondents having a go at it, with Java ME following third.

In our Developer Economics 2011 research, we’ll be asking participants which platforms they’re currently targeting, which ones they plan on targeting and which ones they’re abandoning.

So, what’s changed since then? Well, if anything, the gap between Android and iOS and the rest of the platforms has grown even larger. The Apple App Store carries more than 300 thousand apps, while recent estimates place the number of apps in Android Market at around 130 thousand.

While Nokia has been spending considerable effort on the Ovi Store and increased its popularity with consumers and developers alike, they still have a long way to go to catch up with the two app-dispensing behemoths.

Why do developers head towards iOS and Android? Our Developer Economics 2010 analysis showed that Apple offers a platform that is relatively easy to master and using which a developer can design great UIs. They also have the largest app store and although the certification problem is an issue for some, porting and fragmentation are not a challenge;. Android, on the other hand, has been gaining momentum across all fields, storming its competitors’ key market – the US. Of course, Android’s many fragmentation issues are often overlooked in the face of many handset OEMs’ dependency on the platform.

The disparity between handset sales and available apps

Our Developer Economics 2010 research uncovered a disparity between the number of devices sold for each platform and the number of available apps. One would expect the platforms with the highest market penetration to dominate in terms of apps, but that couldn’t be further from the truth.

Taking 3Q10 as a reference, it’s easy to see that the two platforms with the lowest penetration, iOS and Android, have the highest number of available apps.

On the opposite side of the spectrum, while Java ME and Flash Lite have the greatest market penetration by far, they can scarcely measure up to the newer platforms when it comes to app volumes.

In Q4, the contrast is even sharper. Both Android and iOS stores have grown by almost 100 thousand apps apiece. Windows Phone has shown an admirable growth, reaching 4 thousand apps in just two months, although it still has a long way to go before becoming truly a threat to incumbents.

Monetization and revenue expectations

In Developer Economics 2010, we asked developers how they felt about the revenues they’re receiving from selling their apps. Almost one in four respondents reported poor revenues, while only 5% reported revenues exceeding their expectations.

While there has been a boom of app stores, that’s not necessarily a blessing for developers. Most developers face a discoverability issues, having their apps buried under thousands of other apps. Like one developer said in our previous research “It’s like going to a record store with 200,000 CDs. You ‘ll only look at the top-10″.

What options are there for developers? One option is to adopt a multiple storefront strategy, as well as to tailor your monetization model to specific app stores. As the CEO of Rovio, creator of the prodigious Angry Birds app, noted: “Free is the way to go with Android. Nobody has been successful selling content on Android”.

Developing apps in 2011
Care to see how the apps world has changed in the last year? Stay tuned for Developer Economics 2011, where we delve into app development, monetization, distribution, retailing, porting and fragmentation issues among many others.

Mobile developer? Join the survey and have your say.

[Infographic] The Mobile Developer Journey

The Mobile Developer Journey

A few months ago, VisionMobile published Developer Economics 2010 and Beyond, a research report that tracked the entire mobile developer journey, from app design and platform selection to market delivery and monetization. Now, we’re proud to present the entire Mobile Developer Journey on a single infographic.

Developer Economics 2010 and Beyond was created by VisionMobile and sponsored by Telefonica Developer Communities.

Did you miss the chance to participate in our research and have your say on app development? Well, you can express your views in our upcoming developer research, Developer Economics 2011, which is just a few months away. Pre-subscribe here

Feel free to copy the infographic and embed it in your website.

600 pixels wide version

760 pixels wide version

1000 pixels wide version

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Waking the Dragon: The Rise of Android in China

[Android is leading the smartphone revolution in Western Markets. But what about China, the country with the biggest mobile user base? Guest author Hong Wu analyses the state of Android in China – from chipset vendors to software developers – and how the dragon is waking up.]
The article is also available in Chinese.

HuaQiang Road, ShenZhen, GuangDong, China, an ordinary weekend.

At 10 o’clock in the morning, there are few pedestrians around. Sanitation workers are cleaning up hundreds of deserted mobile phone packages and plastic bags near mobile phone supermarkets, along with bundles upon bundles of mobile phone manuals, and even a few dozens of broken CDs, with labels showing clearly the words “HTC” or “SonyEricsson”.

Clerks in more than a dozen bank branches on HuaQiang Road and ZhenHua Road are busy refilling cash into their ATMs. In the next 5 hours or so, those bank clerks and ATMs will be responsible for hundreds of millions of Yuan in cash transactions. Yes, cash and stock products are the rules of transaction here. This commercial business district, often called as “HuaQiangBei” (or north of HuaQiang), is the strike-it-rich spot for many poor grassroots classes in ShenZhen. This neighbourhood has become the global hub for consumer electronics.

Android has recently become the hot topic within HuaQiangBei district. Sales figures of Android phones have been climbing on a daily basis at YuanWang Digital City. Most of these Android phones use Qualcomm’s chipset, while only a few of them run a chipset that’s made in China.

Nearby, at MingTong Digital City, one can find heaps of ShanZhai (å±±å¯¨) mobile phones on sale (ShanZhai refers to Chinese imitation and pirated brands and goods, particularly electronics). There only a few Android phone models on display, but customers keep coming back asking for more. In the meantime, the software engine that powers ShanZhai smartphones has shifted from Windows Mobile to Android, and most of they are using chipsets that are made in China.

A 15-minute drive from HuaQiangBei business district, at CheGongMiao business district, are the headquarters of dozens of mobile phone design companies, who are in the midst of the mobile food chain. On a daily basis, engineers here crank out some very exotic prototype phones using MediaTek’s chipset solutions. Since 2009 when Android caught fire, sales guys from MediaTek, HiSilicon, Rockchip, Actions-Semi, and other chipset vendors are arriving day after day, hoping to sell their solutions and get a piece of the pie from the Android revolution.

Once an Android-based white label design is out, the phones will be manufactured in factories at Bao’An ShenZhen and LongGang districts. The plastics are then stamped with the right retail brand stickers, and put on the shelf at the consumer electronics crossroads that is HuaQiangBei.

The MediaTek powerhouse

MediaTek (MTK) sells between 300 to 400 million chipsets a year for 2G handsets, and is the predominant force behind low cost phones in China. MTK’s foray into the smartphone market began in February 2009 when they released the MT6516 design, at that time based on Windows Mobile 6.5 OS. MT6516 is a dual core solution; the application processor is an ARM 9 running at 416MHz, while the baseband processor is an ARM 7, running at 280MHz, supporting 2G (GSM/EDGE). This solution suffers somewhat in terms of performance when compared to the Qualcomm’s MSM7200, but its BOM is lower.

One step up, the MT6516 deluxe version includes a 2.8” QVGA resistive touch screen, 2MP camera, GPS, WiFi, and Bluetooth silicon, with a quoted wholesale price of $90. The basic MT6516 version with no touch screen or camera is quoted at $60. Note that approximately $10 of that quote goes towards the Windows Mobile license fee. In other words, expect prices to go down considerable with an Android design.

Despite its market mussle, MediaTek didn’t anticipate that the Android revolution would arrive so soon. For example, MediaTek didn’t join OHA until 2010 while the first MTK Android handsets are just making their first steps into the Chinese market (there is a rumour that a leading Android OEM had earlier veto’ed MTK’s entry into the OHA to avoid price competition).

TongXinDa in ShenZhen has been the first ODM to release an Android phone based on MTK’s MT6516 solution, the “TongXinDa TOPS-A1”. The phone boasts unique features such as dual SIM cards (both GSM and CDMA, and both at active states), a dual boot system (Windows Mobile 6.5 and Android 1.6 both stored in ROM) with 256MB RAM and ROM, and a 400×240 screen resolution. The phone ad is shown below (note that the HTC logo is a fake).

But these are just the first steps of Android as it awakes the Chinese dragon. The full MTK Android 2.1 solution won’t be out in mass production until the end of 2010.

More competition at low-cost Android phones

Rockchip, a design vendor based in FuZhou, China, showed its RK28 solution at HongKong Electronics Show in 2010, focusing on Android tablets and smartphones.

Rockchip is a homegrown chipset design company which conquered the market of MP3 portable media players with its RK26 and RK27 series. In 2009 Rockchip announced its foray into smartphone business with the RK2808 Android solution, but was not widely adopted due to chip heating problems and performance issues.

In a second effort at the smartphone market, Rockchip released its RK2816 solution in 2010, running on an ARM 9 application process at 600Mhz and an NXP baseband chip. The RK28 series is not as tightly integrated as MTK’s MT6516. MTK put both applications and baseband into one single chip, while RK28 used Infineon for their baseband. RK28 series’ advantage lies at its inheritance of multimedia technologies from Rockchip, with hardware decoding of 720p H.264 video.

Rockchip’s RK28 design has been taken up by Ramos (Blue Devil) to power an smartphone device under the model name W7. The device runs Android 1.5, sports a 4.8” 800×480 resistive touch screen, and is intended as competitor to iPod Touch, with a focus on video media playback features. BuBuGao is another OEM planning to deliver cheap smartphones using the RK28 solution.

In the tablet space, Actions-Semi has been designing a new chipset based on the mISP 74K kernel, running Android 2.1. Marketed under the EBOX moniker, the company aims to head-to-head competition with the iPad with support for H.264, MPEG-4, DivX and Xvid hardware decoding at up to 1080p resolution. Such specs are unheard of among current Android solutions.

Around five years ago, phones based on MTK chipset shook up Chinese cellphone market that was dominated by Nokia, Motorola, Samsung and other local brands like Bird, TCL and XiaXin. MTK enabled phones to be sold at very low prices while still boasting advanced features, including exotic ones like eight stereo speakers or 365 days of standby battery life.

Today, most local brands are gone, and the remaining few have reverted to using MTK chipsets for their phones. International OEM brands have to slash prices on their mid-end to low-end phones in order to compete in this fierce cellphone market. MTK’s entry into high end smartphones using Android may certainly repeat the history we witnessed five years ago. Android phones running FroYo selling for under $100? Maybe just a few months away.

Android Developers in high demand

With such a rapid growth of Android-related activities, Android developers are in hot demand today in China. A 2-year Android pro can command up to 20,000 Yuan (close to $3,000) per month; whereas a 10-year J2EE veteran makes probably the same salary if not less. Companies, big and small, are busy scouting for Android talent, but challenged due to the small pool of qualified engineers.

At ifanr.com we recently conducted a survey, with the help of the China Android Dev group (over 1,400 members, 18,000 messages, the largest and most active discussion group for Chinese Android developers) to capture the demographics of Android developers in China. Our survey received over 500 valid responses with some revealing insights into the state of Android developers in China:

In terms of demographics, over 80% of respondents are between 20 to 30 years old, while another 10% is between 31 to 35 years. These are pretty young and dynamic groups of developers.

When asked about how many years of mobile development experience they have, close to 40% are just getting started. And another close to 50% of respondents are within 0-2 years of experience, which is to be expected, given that Android is a two-year-old platform.

In terms of their role in Android development, 37% of survey respondents are part time developers, while over 40% are professional developers. Only 10% are students while about 15% are still holding out to see how Android progresses.

It’s also worth pointing out that over 60% of respondents are individual developers, a.k.a. one-man teams, while over 90% work in teams made up of less than 50 developers. There are companies with more than 100 developers, mostly likely big telecoms like China Mobile, as well as handset manufacturers and design houses.

Given that we targeted Android developers, almost 80% of respondents have developed on Android. We also see healthy shares of iOS, J2ME, Windows Mobile, and Symbian. Based on current trends, we can foresee Android and iOS commanding larger market share going forward, while J2ME, Windows Mobile and Symbian share will shrink further.

Over 45% of respondents have not yet published apps on Google’s Android Market. This is mostly because Android Market and Google Checkout do not yet support Chinese regions. This is a well known issue; there is a large number of developers in China wanting to publish apps onto the Market who can’t; for example many of them have to set up an overseas bank account in order to register and pay for the Market registration fee. It’s a major hassle for individual developers, and where hopefully Google has a mitigation to offer in the near future (PayPal integration perhaps?).

In terms of revenue models, about two thirds of paid apps are using ad banners, while the other one third are using pay-per-download according to the results of our survey. As for the types of ad networks used, Google AdSense comes out on top with nearly 50% of votes. AdMob comes in second with nearly 30% votes. Wooboo, Youmi, and Casee, ad networks from China, are also making strides here.

The level of satisfaction from app revenues is evenly distributed, with 20% of respondents saying they are not doing well and losing money, and 18% saying they are extremely satisfied and doing well or optimistic about the future (the rest 60% is for people who do not make money from apps).

In terms of go-to-market channels, Google’s Android Market tops with more than half of the share. China Mobile’s Mobile Market (MM) is also popular among developers. MOTO SHOP4APPS is surprisingly getting 5% (or 10% among the ones submitted).

Overall, Android has seen explosive growth in China. More and more developers are joining the ranks daily. However, due to the limitations of Android Market and Google Checkout in China, many developers are turning to alternative markets and payment gateways.

In the operator camp, China Mobile is making a big splash trying to woo developers onto its Android-variant, the OMS/OPhone platform. HTC and Motorola are also pushing their own app store agenda.

The Android ecosystem in China is still a sleeping dragon, but is waking up day by day. There will be more ad networks, more app stores, and more payment gateways coming out in the foreseeable future before consolidation moves in. Android in China is probably at its most exciting stage right now.

– Hong

[Hong Wu is a seasoned mobile app developer based in Silicon Valley, US. He’s currently building an awesome product that hopes will make TVs enjoyable again. He’s also a core member of ifanr.com, the leading new media blog site in China that focuses on mobile Internet industry, smartphones, gadgets, and exciting startups in China. You can contact Hong at lordhong /at/ gmail.com or follow @lordhong on Twitter.]

Developer Economics 2010: The Role of Networks in a Developer World

[In the final part of our series on our latest research – Mobile Developer Economics 2010 and Beyond – Telefonica’s James Parton discusses the challenges facing mobile network operators in their quest to stay relevant to mobile application developers. Full research report available for free download or see part 1, part 2 and part 3 of the blog series on mobile developer economics]
The article is also available in Chinese.

Historically, operators have been one of the few options available to developers when bringing new applications and services to market. Typically this has been in the form of placing applications in the operator mobile web portal or via a handset preload agreement within the operator variant software build.

However operator go-to-market channels have suffered from a lack of transparency, lengthy bureaucratic processes and the inevitable arrogance of a dominant gatekeeper. The rapid rise of app stores has completely rewritten the rule book, and now provides independent developers with a more open and democratic way to get their product in front of potential consumers.

The Developer Economics 2010 report graphically highlights this trend, with less than 5% of the 400 developer respondents persevering with the operator channel. Clearly app stores have delivered real economic benefits to developers, with time to shelf being reduced by two thirds, and time to payment being reduced by 22 days (see part 2 of our blog series) when compared to the Operator channel.

There are some notable exceptions to the trend. Andrew Fisher, CEO of Shazam, frequently highlights the Operator channel as one of the reasons for Shazam’s wide spread success, and recommends companies to invest in developing operator partnerships. Christopher Kassulke, CEO at HandyGames confirms that major games developers also prefer to invest in selling games via operators, due to the higher per-download price points and the sustainable, predictable revenues that the operator channel offers.

Opportunity lost?
A key question for operators is “Has the app distribution opportunity been irreversibly lost?” An interesting insight from the Developer Economics report is that the app store phenomenon is perhaps not as widespread as portrayed. Beyond the iPhone and Android ecosystems dominated by native app stores, there is a significant gap in the market for operators to assist in the distribution of apps and services. This is especially significant in the growing mobile web app sector.

Of course it goes without saying; unless operators fix the legacy issues with their lengthy bureaucratic processes and â€˜ivory tower’ attitude then the distribution opportunity will remain untapped. One of the interesting friction points will be the open market model vs. selective editorial cherry picking of apps favoured by many Operators.

Open market vs Cherry picking
In an open market model, there is no editorial body deciding the catalogue of applications presented to consumers. A complaint often heard from developers is “Who do they think they are, deciding if my app is good enough?” The customer is presented with unfiltered choice made available by any and all developers. The downside of this approach is the “lost in the noise” issue increasingly voiced by developers, the reduction in quality or increase in copyright-infringing apps and the over reliance on your app appearing in the “recommended” or top 10 listing of the relevant content categories to drive downloads.

Operators favouring the editorial selection model (â€˜cherry picking’) will argue less is more. Based on an understanding of their user base, operator content managers will work with developers to select the most appealing and appropriate apps. This directly addresses the “lost in the noise” issue as the catalogue will be much smaller vs. an open model app store. This approach should also deliver higher conversion rates if the apps are effectively matched to the needs of the audience. Cynics will argue that the operator content managers are not qualified to make the right selections, and this method heavily favours established brands like Facebook which are “safe” vs. lesser known independent developer offerings, thus stifling innovation.

Now developers need to figure out how to make their apps stand out from the crowd. Giving your app away for free just won’t cut it in the long run, as there is no emotional or financial bond between your app and the user. Pinch Media research shows that the average shelf life of a free iPhone app is less than 30 days, with only 20% of users returning to the app after the first day of installation. You don’t want to be the app equivalent of the shortlived May Fly ?

Key to ensuring your app will appeal to consumers is working directly with your intended audience at an early stage. Why waste time and effort if you don’t have an understanding of the following critical questions:

Which features will make a difference to people?
What is your addressable market?
How much are people prepared to pay you for your trouble, if anything?

This marketing insight gap was highlighted in “Developer Economics 2010”, showing that perhaps the app sector is not as mature as previously presumed. Worryingly the vast majority of developers do not invest in any formal market research or even user testing, outside of friends and colleagues.

Recognising that many development companies may not have specialised marketing people or the resources to conduct formal research, the operator can help fill this gap by opening up access to their customer base to encourage co-creation and testing with real end users, free of charge.

This model of match making developers with end users was championed in the UK in early 2009 when we launched O2 Litmus. This fresh approach quickly gained recognition for its innovative model. To date over 7,600 O2 UK customers have volunteered to participate in the development and testing of applications with developers. Typically engagement levels run at around 10% of the tester base actively working with developers at any one time. Approaching 100 individual apps have benefitted from customer co-creation in O2 Litmus, generating over 2,500 test installations to date.

Programming the network
I have previously written about the potential for Operator delivered network enablers (API’s). Developer Economics 2010 highlights the challenge that faces the operator community in effectively evangelising this message. Only 5% of respondents felt that it was the role of the Operator to expose network API’s.

The pace of technological innovation is not being matched by business model innovation. Increasingly developers feel constrained by the business models on offer. Pay per download dominates (two thirds of respondents), with subscription and advertising following.

This signals another significant opportunity for Operators, and an important angle to the exposure of operator network enablers. It is easy to limit the conversation around enablers to the technical feature set of each enabler. The untapped opportunity for both developers and operators alike is wrapping the exposure of enablers with new innovative business models, such as revenue share on the transactional traffic generated

If developers can plug in additional revenue streams from the usage of operator enablers, this will address both the lack of commercial monetisation options available to developers, whilst introducing richer functionality to their app experience. If executed correctly I believe this can effectively address the developer perception issues highlighted in the report.

I will close the post with a developer quote from Developer Economics 2010 that perfectly sums up both the opportunity and challenge facing mobile Operators today:

“The first mobile company to TRULY reach out to web developers will have an edge over the competition, but right now I don’t see any candidates, except for Google. If Google became an operator our problems would be solved”

– James
Head of Telefonica Developer Communities
You should follow James on twitter at @jamesparton

[James is a Chartered Marketer specialised in Mobile. With an award winning track record of product delivery including twenty five major launches, featuring twenty first to market achievements, including MMS, mobile video, mobile music downloads, the UK DVB-H Broadcast TV trial in 2005, and the ticketing and interactive services supporting The O2 Arena in London. Recognised by Revolution Magazine as one of the “Future 50”, James is a regular industry speaker, panellist, judge, blogger, and has lectured in Marketing and New Product Development at The University of Oxford Faculty of Continuing Education and Reading University.]

Full report is available for free download, thanks to the kind sponsorship of Telefonica Developer Communities. You can follow Telefonica Developer Communities through their blog.

Are you a mobile app developer? Want to be part of VisionMobile’s next developer research and voice your own opinions? Take a moment to fill out the registration form.

Mobile Developer Economics: The Building Blocks of Mobile Applications

[In part 3 of the 4-part series on our latest research – Mobile Developer Economics 2010 and Beyond – guest author Tor BjÃ¶rn Minde takes a critical look at the developer sentiments on code development, debugging and support. Full research report available for free download or see part 1 and part 2 of the blog series on mobile developer economics].
The article is also available in Chinese.

Do iOS and Android enjoy a large market penetration? VisionMobile’s research suggests that developers think so even if it is not case for iOS and Android per se; iOS and Android are available in a fraction of devices compared to Symbian and Java ME. Most probably, developers view addressable market in terms of ability to reach a large audience of ‘application consumers’ rather than just a large installed base of handsets.

Developers also consider “quick to code and prototype” as a favourite platform aspect, second only in importance to making money on the platform. This reveals that the ‘fun’ aspect of mobile development co-exists with the realism of money-making in developers’ minds.

The new report Mobile Developer Economics 2010 and Beyond, contains many new insights into mobile development. In this article, I ‘ll comment on and highlight key take-aways from chapter 3 of the report titled “the building blocks of mobile applications”.

Perceived market penetration should be interpreted as real app usage penetration
There seems to be a contradiction in terms regarding the platform aspect considered â€˜best’ by developers. Developers flock onto iOS and Android due to a “perceived” large market share but still there’s a discrepancy between the installed base of the platforms and the number of available apps for each platform. The platforms that have greatest installed base (j2ME, Symbian) have the fewest applications and vice versa.

So, is there (only) a perceived market penetration by the different platforms or are there facts that support the choice?

Looking at some related data points from an Ovum report, iPhone has 69% of all downloads while Symbian has 9% of all downloads. The report further says that 57% of all downloads in 2009 originated from North America, indicating a high usage pattern among iOS/Android device users. Users of iPhones and Android devices are more likely to download applications.

Piecing together some more data points on iOS and Android, specifically app stores’ ease of use, application discovery and the multi-touch experience, reveals an important point; for application developers the addressable market that matters is not just the installed base. While iOS and Android have limited deployments compared to the incumbent platforms, they are indeed ahead of the curve in terms of download share, usage share and ease of use – which explains the developer perception of large market share for iOS and Android. Hence, perceived market penetration should be interpreted as app usage and download share penetration.

It is still fun to code, but money-making rules
Looking at technical reasons that mobile developers consider important when selecting a platform, what sticks out as the favourite reason is “quick to code and prototype”. Moreover, Android, Mobile Web and Flash Lite seem to have the shortest learning curve while Android enjoys the shortest development time.

Developers still consider fun and coding speed as important even if developer mindshare is turning towards the appeal of monetization and reaching a large audience. The technical reasons for selecting a platform seem to be gradually becoming a less important selection criterion. However, developer responses are blurred by ‘soft values’ which affect the answers to the question “What is important”.

A study we did at Ericsson Labs argues that developers, these pioneers of mobile application development, can roughly be grouped into four categories. The answers to the question “What is most important” will be very different between these groups. One developer group has very strong opinions about open-source, another group are mainly focused on a good return on investment, a third group are attracted by the lowest possible barriers to entry and the last group try to keep one hand in every cookie jar.

Future building blocks of mobile applications
In general, mobile web development within an HTML5 browser or web runtime is promising when it comes to market penetration, ease-of-use and cross platform support. At the same time, the VisionMobile study shows several pain-points with mobile web technologies compared to native applications, namely issues with development environments, device API support and UI creation.

We will probably see both environments (native and web) used by developers in the future, both served by app stores and other discovery mechanisms. One could assume that the web runtime will fare better than previous cross-platform initiatives (J2ME, Flash Lite) since there is a large community developing to the web runtime (as opposed to single companies).

Untapped opportunities in developer support
VisionMobile’s study hints at the market gaps in developer support offerings. Developers are most willing to pay for access to hidden APIs – clearly a monetisation opportunity for platform vendors. Premium access to APIs can be delivered by device vendors as a point of differentiation, but it will run counter to cross-device application support of the platform. To achieve both depth of API reach and breadth of cross-device support, we need standards – which interestingly enough are not so important for developers, as VisionMobile’s study reveals.

Finally, VisionMobile suggests that developers use non-vendor sites and developer communities most often for tech support – examples being Slashdot, Stackoverflow, Daniweb, anddev.org and the Chinese dev site csdn.net. At the same time, our study at Ericsson Labs also found that the main tool developers use for tech support is still regular search engines across tech support or developer communities.

Concluding remarks
All in all, the new VisionMobile report analyses most areas of interest for those who need to understand the developer experience. The knowledge of the developer experience using these ‘first wave’ platforms (what the report refers to as “the Renaissance period”) for mobile application development and marketing is crucial in order to guide the development of future platforms.

– Tor BjÃ¶rn
follow me at @ericssonlabs.

Full report is available for free download, thanks to the kind sponsorship of Telefonica Developer Communities. You can follow Telefonica Developer Communities through their blog.

Are you a mobile app developer? Want to participate in the next mobile developer research and voice your own opinions on mobile development? Fill out the registration form & we’ll be in touch.

[Tor BjÃ¶rn is head of Ericsson Labs with 25 years experience in mobile multimedia & applications]

Mobile Developer Economics: Taking Applications to Market

[In part 2 of the 4-part series on our latest research – Mobile Developer Economics 2010 and Beyond – Andreas Constantinou looks at how effectively have app stores have reduced the time-to-market for applications and the five key challenges for mobile developers today in taking apps to market. Full research report available for free download or see part 1 of the blog series on the migration of developer mindshare].
The article is also available in Chinese.

If there’s a single reason for the mass-entrance of developers into the mobile market, it is app stores. We view app stores as direct developer-to-consumer channels, i.e. commercial conduits that streamline the submission, pricing, distribution and retailing of applications to consumers. For a breakdown of key ingredients in the app store recipe, see our Mobile Megatrends 2010 report. App stores have streamlined the route to market for mobile applications, a route that was previously laden with obstacles, such as lack of information, complex submission and certification processes, low revenue shares and regional fragmentation.

Despite the hype, there is sporadic use of app stores outside the Apple and Android platforms. Our survey of 400+ mobile developers found that only four percent of Java respondents used App Stores as their primary channel to market. Windows Phone and mobile web developers find app stores little more relevant, with fewer than 10 percent of such respondents using one as a primary channel for taking applications to market.

This contrasts completely with platforms that have â€˜native’ app stores. Over 95 percent of iPhone respondents use the Apple App Store as their primary channel, while the percentage of Android respondents using Android Market is just below 90.

In terms of the incumbent mobile platforms, around 75 percent of Symbian respondents that use app stores, use the Nokia Ovi Store. The significant number (20-25 percent) of Symbian developers who also use iPhone and Android app stores reveals the brain-drain that is taking place towards these newer platforms. This is a particularly critical migration of developer mindshare, considering that the Symbian platform is the hardest to master. Thus, the size of developer investments on Symbian being written off is substantial.

Besides the growth of apps, app stores are the cornerstone of another major transformation that has taken place in the mobile industry: the mass-market use of mobile as the next marketing channel beyond the Internet. We would argue that it was app stores that triggered the influx of apps – not the open source nature of Android, or the consumer sex appeal of the iPhone.

App stores triggered the sheer growth in app numbers and diversity that led to the clichÃ©, “there’s an app for that”. Another clichÃ©, “the screen is the app,” tells the other half of the story. Combined, the app store and touchscreen were the two essential ingredients behind mobile apps as the next mass-market channel beyond the Internet. These two ingredients inspired just about every media and service company to commission companion or revenue-driven apps as extensions to their traditional online channels. In effect, this phenomenon fueled the app economy, even beyond what app store numbers alone suggest.

Speeding up time to market
App stores have revolutionised time to market for applications. To research exactly how radically the time to market for applications has changed since the introduction of app stores, we analysed two parameters:
– the time to shelf, i.e. how long it takes from submitting an application to that application being available for purchase
– the time to payment, i.e. the length of time between an application being sold and the proceeds reaching the developer’s bank account

Our findings show that app stores have reduced the average time-to-shelf by two thirds: from 68 days across traditional channels, to 22 days via an app store. These traditional channels have been suffering from long, proprietary and fragmented processes of application certification, approval, targeting and pricing, all of which need to be established via one-to-one commercial agreements. Moreover, app stores have reduced the time-to-payment by more than half; from 82 days on average in the case of traditional channels, to 36 days on average with app stores.

The bigger picture that emerges is that the developer’s choice of platform impacts the time-to-market for applications, i.e. the length of time from completing an application to getting the first revenues in. The iOS platform is fastest to go to market with, particularly thanks to Apple’s streamlined App Store process, while Java ME and Symbian are the slowest, due to the sluggishness of the traditional routes to market used by these developers (in particular via commissioned apps and own- website downloads).

Challenges with taking applications to market
Application distribution may be going through a renaissance period that began in 2008, with the direct-to-consumer model pioneered by Apple’s App Store. However, taking applications to market is still plagued with numerous teething problems, as is typical with nascent technology. There are four recurring issues reported by developers: app exposure, app submission (and certification), low revenue share and the challenges with app localisation. A fifth challenge (and untapped opportunity) is the efficient, crowd-sourced testing of mobile apps by real users.

Challenge 1. Application exposure
Our survey found the number one issue for mobile developers to be the lack of effective marketing channels to increase application exposure, discovery and therefore customer acquisition. This was an issue mostly for Flash and iPhone developers, followed by Symbian, Android and Java ME developers. Developers reported persistent challenges with getting traffic, customer visibility or in short “being seen”. One developer put it succinctly: “It’s like going to a record store with 200,000 CDs. You’ll only look at the top-10.”

The exposure bottleneck is new in mobile, but an age-old problem in fast moving consumer goods (FMCG). With such large volumes of applications in stock, app stores are taking on the role of huge supermarkets or record stores. As in any FMCG market, app developers have to invest in promoting their products above the noise, because supermarkets won’t.

Our research shows that in 2010, developers are relatively unsophisticated in marketing their applications. More than half of developers surveyed use free demos and a variety of social media, i.e. the ‘de facto’ techniques for application promotion. Other techniques cited were magazines and influencing analysts or journalists, while promotion through tradeshows was also deemed popular among a fifth of respondents. Less than 30 percent of respondents invest in traditional marketing media such as online advertising or professional PR services.

When asked about what type of marketing support they would be willing to pay for, our survey found half of respondents willing to pay for premium app store placement. This willingness varies greatly by platform, however; developers whose platform features a â€˜native’ app store (iPhone, Android and to a lesser extent Symbian) are almost twice as likely to pay for premium app store placement, compared with developers whose platforms do not (Java and mobile web) as well as Windows Phone. This finding indicates that direct-to- consumer distribution channels are necessarily crowded and therefore developers will be willing to pay a premium to be able to stand out from the crowd – much like how FMCG brands pay for premium shelf space in supermarkets.

Yet with free applications being the norm, developers have to become more creative with promotion and advertising; free applications make up more than half of the Android Market catalogue and 25 percent of the Apple App Store catalogue, according to different reports by Distimo and AndroLib.

There are two types of solutions emerging to cover the market gap of application promotional services. Firstly, there are app discovery and recommendation startups (e.g. Apppopular, Appolicious, Appsfire, Apprupt, Chorus, Mplayit and Yappler), which help users discover applications based on their past preferences or on explicit recommendations from the user’s social circle. Secondly, there are white label app store providers like Ericsson that are moving to app mall (shop-in-shop) infrastructure. App malls will allow the creation of 1,000s of application mini-stores, each targeted to niche sub-segments, much like Amazon mini-stores.

However, the gap in application marketing services is widening in 2010 due to the rapid growth in application volume, which is outpacing the appearance of app discovery and recommendation solutions. We believe that application marketing and retailing services remain the biggest opportunity in mobile applications today.

Challenge 2. Application submission and certification.
Application submission and certification are two of the top four challenges for mobile developers, according to our survey. Overall, the most important issue related to certification that was raised by nearly 40 percent of respondents is its cost. In some cases, developers report that the certification cost rises to a few hundred dollars per app certification (not per app). Such economics do not work for low-cost apps, but only for mega-application productions. Java developers, for example, report that Java Signed is impractical; developers have to purchase separate certificates based on the certificate authority installed on the handset – and certificates are expensive.

Challenge 3. Dubious long-tail economics
The mobile app economy is nothing short of hyped from the successes that have come into the limelight – the $1m per month brought in by the Tap Tap Revenge social app, or the $125K in monthly ad revenues reported by BackFlip Studios on their Paper Toss app. Yet the economics for long-tail developers – i.e. the per-capita profit for the average developer – remain dubious at best.

At least 25 percent of Symbian, Flash, Windows Phone and Java ME respondents reported low revenue share as one of the key go-to-market challenges. Most app stores are still playing catch-up to Apple in terms of the revenue share they are paying out to the developer. As one developer put it, “There has been a bastardisation of the 70/30 rule which has been mis-marketed by app stores; for example with Ovi Store, where operators often get 50 percent of the retail price, so developers gets 70 percent [of the remainder]”. Unsurprisingly, the revenue share was not a major challenge for iPhone or BlackBerry respondents.

Moreover, less than 25 percent of respondents stated that revenue potential was one of the best factors of their platform; on average revenue potential ranked last among “best aspects” of each platform, showing how mobile software development is still plagued by poor monetisation in 2010.

The dubious long-tail economics are reinforced by our findings on developer revenue expectations. Only five percent of the respondents reported very good revenues, above their expectations, while 24 percent said their revenues were poor. Note that we didn’t poll for absolute revenues, because of the discrepancies across regions, different revenue models and distance of developers from revenue reporting. At the same time, there is a general consensus of optimism; 27 percent of respondents said that their revenues were as projected, while another 36 percent said they should be reaching their revenue targets.

There are two effects at play that make for poor long-tail economics. Firstly, the number of â€˜garage developers’ who are creating apps for fun or peer recognition but not money; and secondly, the noise created by the â€˜app crowd’ which prompts developers to drop prices in order to rise to the top of their pack.

There are also platform-specific effects: the unpredictability of revenues, in the case of the Apple’s pick-and-choose culture for featured apps; and, the limitations of paid app support for Android, where paid applications are only available to users in 13 countries out of 46 countries where Android Market is available, as of June 2010. Android has also been jokingly called a “download, buy, and return business”, referring to how you can get a refund for any paid Android application without stating a reason within 24 hours of purchase – a policy that allows many users to exploit the system. In addition, the applications that are published on Android market are not curated by Google, resulting in 100s of applications that are low quality or are infringing copyright, thereby making it harder for quality, paid apps to make money. Even in economically healthier ecosystems like Apple’s App Store, a standalone developer can hope to sell in total an average of 1,000-2,000 copies of an application at an average price of $1.99, which is barely justifying the many man- months of effort that it takes to develop a mobile application by today’s standards.

We maintain that the monetisation potential for the long tail of apps won’t be realised until effective policies are put in place to curtail the adoption of free apps – for example by enforcing a minimum $0.01 app price. Psychology experiments have proven time and time again how our perception of value is distorted when the price drops to zero. It is time for app store owners to borrow from cognitive psychology to help boost the long-tail developer economy, rather than compete on number of downloads.

Challenge 4. Localisation.
Another issue highlighted was the lack of localised apps. One developer said characteristically, “There is a big problem for developers in markets with low penetration of English as a second language. Since the platforms are poorly adjusted to localisation, the costs of development grow and thus profitability and attractiveness [drop]. It would be great to see platforms that take action towards easing the challenge of localisation.” The lack of localised apps for non-English markets is exacerbated for Android. A search on AndroLib reveals that out of the approximately 60,000 apps on Android Market, there are only about 1,400 apps localised in Spanish and only 1,800 localised in French, as of early June 2010.

The lack of localised apps on Android presents the number one opportunity for alternative app stores like SlideMe, AndAppStore and Mobihand, i.e. to attract communities of regional app developers, or to facilitate localisation of apps to different languages – in other words, to reach where Android Market doesn’t reach.

Challenge 5: Application planning and testing
Application planning and testing is a core part of taking an application to market. Our research confirms that planning techniques are near-ubiquitous for application developers. Yet, small development firms have limited means today to beta test and peer review their applications with a cross- section of representative users. Given the hundreds of thousands of mobile apps, we believe that efficient (crowd-sourced) testing of apps in a global market of users is considerably under-utilized. This presents an opportunity for the few solution providers in this segment – Mob4Hire and uTest.com, for example – but also for network operators, who can generate a channel for testing applications with end users, and provide an open feedback support system back to developers. Overall though, the need of mobile developers to have their apps tested cost-effectively by real users around the world is very much under-served.

Looking forward to your comments. Later this week, we’ll look at the next chapter in our research on the building blocks of mobile applications. Stay tuned or, better yet, subscribe to the blog.

Full report is available for free download, thanks to the kind sponsorship of Telefonica Developer Communities. You can follow Telefonica Developer Communities through their blog.

Are you a mobile app developer? Want to participate in the next mobile developer research and voice your own opinions on mobile development? Fill out the registration form & we’ll be in touch.

– Andreas
you should follow me on twitter: @andreascon

Mobile Developer Economics 2010: The migration of developer mindshare

[In part 1 of the 4-part series on our latest research – Mobile Developer Economics 2010 and Beyond – Andreas Constantinou looks at the migration of developer mindshare that is taking place in mobile software and the drivers behind that. Full research report available for free download]
The article is also available in Chinese.

Software has played a critical role in transforming the mobile industry since the beginning of the century. Since 2008, mobile software and applications have moved from the sphere of cryptic engineering lingo to part of the essential marketing playbook for mobile industry vendors.

In stock market terms, developer mindshare is one of the hottest “commodities” in the mobile business, one whose “stock price” has ballooned in the last two years. Platform vendors, handset OEMs, network operators, hardware vendors, and infrastructure providers all want to contribute to mobile apps innovation. Mobile players, from hardware vendors and handset OEMs to networks, are now vying to win software developer mindshare, in order to add value on top of their devices and networks. But how is the landscape of mobile developer mindshare looking today?

Our new report Mobile Developer Economics 2010 and Beyond, offers many new insights into mobile developer mindshare, and analysis into every touch point of the developer journey, from platform selection to monetisation. The research is based on a set of benchmarks and a survey across 400+ developers globally, segmented into 8 major platforms: iOS (iPhone), Android, Symbian, BlackBerry, Java ME, Windows Phone, Flash Lite, and mobile web.

In terms of developer mindshare, our research shows that Symbian and Java ME, which dominated the developer mindshare pool until 2008, have been superceded by the Android and iPhone platforms. Despite Symbian remaining in the pole position in terms of smartphone market penetration, â€˜out-shipping’ iPhone 4 to 1 and Android many-times to 1, the signs of dissatisfaction with the way the Symbian platform has evolved have long been evident.

Indeed Android stands out as the top platform according to developer experience, with close to 60 percent of developers having recently developed on Android, assuming an equal number of developers with experience on each of eight major platforms. iOS (iPhone) follows closely as the next most popular platform, outranking both Symbian and Java ME, which until 2008 were in pole position.

In the last two years, a mindshare migration has taken place for mobile developers away from the incumbent platforms Symbian, Java ME and Windows Phone, while a substantial number of PC software developers have flocked to iPhone and Android. The large minority (20-25 percent) of Symbian respondents who sell their apps via iPhone and Android app stores reveals the brain-drain that is taking place towards these newer platforms. The vast majority of Java ME respondents have lost faith in the write-once-run-anywhere vision. Moreover, anecdotal developer testimonials suggest that half of Windows Phone MVP developers (valued for their commitment to the platform) carry an iPhone and would think twice before re-investing in Windows Phone. We should also point out the exodus of some influential developers from the Symbian camp, as is the case with the closing of Symbian-Guru.com, one of the leading community sites related to the platform, whose founder moved to adopt Android.

The disparity between devices and applications

One of the most telling clues about the speed of evolution of the new vs old platforms is the great disparity between the device installed base and the number of available apps for each platform. While Windows Phone, Symbian, Java and Flash have many times the market penetration of Android, iPhone and BlackBerry, the number of apps available tells a very different story.

The two platforms that best illustrate the above point are Java ME and iOS (iPhone). Java ME boasts an installed base of a staggering 3 billion, while the actual number of apps is very low by comparison. The iOS platform on the other hand is available in just over 60 million devices (not including iPods/iPads) but its app store contains more than 250K apps at this time, a number that will climb even higher in the foreseeable future.

The disparity is also pronounced in cross-platform runtimes i.e. Java ME and Flash Lite. This flies in the face the traditional common sense, i.e. that cross-platform runtimes are the way forward, when the number of apps available for those platforms are tiny in comparison. The recent Apple vs Adobe rift and the subsequent banning of Flash from all iProducts has only weakened Adobe’s position. In parallel Sun has launched half-hearted attempts at reducing fragmentation, the number one Java ME pain point, while the Oracle take over is only worsening the problem.

Choosing a mobile platform – facts and perceptions

Most developers work on multiple platforms, on average 2.8 platforms per developer, based on our sample of 400 respondents (although note that 60% of respondents had more than 3 years of experience). Moreover, one in five iPhone and Android respondents release apps in both the Apple App Store and Android Market.

The question is: in a market crowded with software platforms, how do developers choose between iOS, Android, Symbian, Java ME, BlackBerry, Flash, Windows Phone, mobile web, WebOS or Samsung Bada? For today’s mobile developer, market penetration and revenue potential are hands down the two most important reasons for selecting a platform.

Large market penetration was chosen by 75 percent of respondents across each of the eight major platforms we surveyed. Revenue potential was the second most important reason, chosen by over half of respondents. In fact, market penetration and revenue potential were more important than any single technical reason for selecting a platform, revealing how mobile developers today are savvy about the economic implications of mobile development.

The preference of marketing over technical reasons signifies a turn in the developer mindset. Developers no longer see programming fun as a sufficient reward in itself, but consider monetisation opportunities as a primary priority. It seems that, mobile developers now have a sense of commercial pragmatism. As commented by one of our developer respondents, “Technical considerations are irrelevant. The choice of platform is always marketing-driven”.

Looking forward to your comments. Next week, we’ll look at the next chapter in our research on taking apps to market. Stay tuned or ,better yet, subscribe to the blog.

Full report is available for free download, thanks to the kind sponsorship of Telefonica Developer Communities. You can follow Telefonica Developer Communities through their blog.

Are you a mobile app developer? Want to participate in the next mobile developer research and voice your own opinions on mobile development? Fill out the registration form & we’ll be in touch.

– Andreas
you should follow me on twitter: @andreascon

Wholesale Applications Community: The Operator Love Affair with Developers

[The Wholesale Application Community has made big headlines in the last two months. But beyond the affectionate operator feelings and investments this signals towards developers, will the initiative succeed where JIL has failed? Guest author Simone Cicero digs behind the hype to see what lies behind the WAC buzz]

Despite its impressive line up of network operators, the Wholesale Applications Community initiative has been greeted with skepticism across both industry-insider and developer audiences.

Founded in February 2010, WAC is an initiative backed by 24 operators with the incredibly audacious vision of unifying apps distribution, packaging and execution. WAC’s mission is about realising “write once deploy everywhere” for mobile applications and enabling developers to “create applications for the long tail” (a concept that dates back to 2004)

So how does WAC plan to achieve such ambitions? The operator-backed initiative has indicated it will provide:
– a reference implementation for a web runtime environment as well as Network Operator APIs
– tools for development including an SDK and an emulator
– billing enablers and specifications for WAC compliant application stores (as mentioned in the FAQ)

WAC = BONDI + JIL
Like a phoenix, WAC seems to be born out of the BONDI and JIL initiatives and has committed to evolving BONDI and JIL into a common specification within the next 12 months.

OMTP’s BONDI has been the most-successful operator-backed initiative aimed at developers. BONDI is in essence a specification of Device APIs for securely accessing device functionality (incl. status, sensors, telephony and SIM APIs) and user data (incl. phonebook, location and gallery). BONDI APIs are accessible from widget runtimes and should (theoretically) also become available via browsers.

The BONDI project has attracted the interest of a few thousand developers and provided an official Windows Mobile reference implementation (with more unofficial implementation projects in the pipeline). We should also see deployment on commercial handsets by the end of 2010 with the first BONDI-compliant widget SDK already appearing from LG.

The JIL (Joint Innovation Labs) project was created by four mega network operators (Vodafone, Softbank, China Mobile and Verizon) to hook operators within the App Store game, and control the app submission, billing and distribution process. JIL is a realisation that the standards route (read: OMA or GSMA) is a turtle-speed approach in a rabbit-speed market. As such, JIL embraced and extended the existing W3C widget specs, adding its own APIs and security model. However, despite the operator investments and ambitions, to date JIL has not delivered much beyond a widget spec and SDK.

A third operator initiative that is part of the WAC scope is Network APIs, i.e. APIs allowing resources from the network (e.g. location, presence, user info) to be exposed programmatically to developers: in this area WAC will build on early achievements of GSMA OneAPI Initiative.

In essence WAC is an attempt to wrap BONDI, JIL and Network API specs and tools into a single operator-led initiative.

In parallel to the technical objectives, WAC aims to define a simplified distribution and deployment model for mobile apps. Rather than build its own Market WAC will probably seek to certify “associated WAC application stores” as well with third party markets offering WAC compliant applications.

WAC challenges ahead
To pragmatically assess WAC’s potential, we need to consider how it differs to what’s come before, the environment in which it plays in, and its stated ambitions and roadmap.

Some industry observers compare the Wholesale Applications Community with the JCP (Java Community process) and Java ME in terms of the challenges of standardising app development and distribution. Despite being still the most used and, for sure, the runtime with the largest installed base, the story of Java ME as a platform has been undoubtedly fraught with strategic and execution flaws.

Sun failed to see the opportunity of an app store; Java store is both a half-baked effort and a latecomer to the App Store market considering that Java ME was launched in 2001. Neither did Sun succeed at its main goal – promulgating a consistent runtime (open source or closed source) within the 1B-a-year device market by choosing to over-protect its traditional revenue streams coming from licensing and TCK testing. Sun also chose to license its reference implementation rather than impose a Sun-brewed, mobile Java runtime with consistency and compatibility as the first priority.

In parallel, the design of JCP proved too slow and bureaucratic. The JCP members spent too long entangled in preferred ballots, drafts, reviews, public vs private releases, resulting in specs that were just too late to market. The best testament to that was probably the MIDP3 saga, which arrived at the era of Android and iPhone development that doesn’t need Java ME any more. With 24 operator members behind the WAC initiative, it’s going to prove hard to reach consensus amongst competitors.

It’s also worth realizing that whereas Java ME has been loosely governed by Sun Microsystems (an entity external to the mobile value chain) the WAC consortium is led by operators who play a critical role in the mobile value chain and can, at least in the developed mobile markets, drive the product customization phase – and as such WAC is better positioned at – for example – mandating WAC runtime specs to be preloaded on an Android handset. At the same time, operator specs are seen by handset OEMs as long wishlists with the device compliance index being on continual decline for European operators.

The timing of WAC is another challenge. Given that it will take (at least) 12 months to merge BONDI and JIL, the first WAC-compliant device won’t hit the market before mid-2011. Where will iPhone, Android, Windows Mobile and the other competing platforms be in the next 12 months? What features should a developer expect from a runtime hitting the market in 18 months’ time? Not to mention that developer choices are already being set in stone as the major platforms lock-in developer mindsets (just look at how fast iPhone/iPad apps are ramping up now that that OSX is the number one choice for many mobile developers).

Is there a future for WAC?
The apps market is showing worrying signs for operators: mobile app stores are depriving operators from new revenue streams and pushing them further away from the customer front – only leaving operators with the cost burden of supporting customers in the post-sales phase and building out bigger, fatter bit pipes to carry the app-induced traffic.

Once upon a time, operators were responsible for most technology innovation like voicemail, the 2-line-in-1-SIM, premium SMS and Multimedia MMS and high speed networks.

Operators are still in the driver seat with 70% of the mobile trillion-pie flowing through the networks. In Europe, North America and the Far East, network operators still play the dominant role whilst in control of product ranging, subsidy, distribution and retailing decisions.

Yet during the last few years, the ownership of innovation in mobile services and handset products is migrating from the operator hands to Internet/PC players, with operators left to play the role of bureaucrats, support providers and handset subsidization agents. The latest operator innovation like RCS, JIL and network-exposed location seems only to reinvent the wheel. All this, while players from the PC/internet industry like Apple exploit the rivalry between operators by soliciting major subsidies.

At the end of the day, the Wholesale Applications Community initiative is a knee-jerk reaction on the part of operators – an effort towards embracing developers and seizing the community of value-adding actors away from the likes of Nokia, Apple and Google. Now the question is how well and how quickly can WAC execute on the ambitious declaration of intents that WAC is today.

WAC should exploit its stronghold to add value where gaps exist at present, rather than reinventing the wheel. As such, instead of specifying runtimes or gating (and chocking!) the application submission process, WAC should focus on mandating an affordable and consistent revenue sharing policy across operators. By facilitating micro-payments WAC could enable new service charging models such as pay per (single) use, giving developers important alternatives to the free, ad-supported or paid app options.

Another key focus for WAC should be to empower developers with unique network-based APIs like user demographics and targeting and provide decent usage analytics (as mentioned by O2’s James Parton) and a recommendation engine to allow developers to better target the user audience and their application features based on the vast amount of demographics and usage information the operators/carriers hold in their network.

Finally, rather than specifying a web runtime spec based on a lowest-common-denominator approach, WAC should embrace existing runtime specs as much as possible, and consider embracing HTML5 which seems to be unanimously adopted by the major players of the industry, including Nokia, Apple and Google.

[Update: On May 5, WAC held an analyst webinar outlining a few important points. Specifically, Tim Raby, CEO of OMTP is acting as the interim CEO of WAC, while a formal Board for the non-profit organisation will be elected in July 2010. Secondly, WAC indicated it’s planning to standardise the commercial model (perhaps extending to the revenue share formula) for developers and ‘compliant’ app store owners. Developer documentation, developer events and further details on the mission and deliverables of WAC are planned for the second half of 2010.]

What are your thoughts on WAC and the role of operators in mobile apps?

– Simone

[Simone is an mobile strategist, innovation specialist, technology addict and open source enthusiast, having followed the disruptive changes of the mobile industry over the last few years. Simone has served at Three’s Global Device and Application group and at as a consultant at Altran. You can also follow Simone on his personal blog at meedabyte.wordpress.com]