The App Store Craze


I was at a family event and all my nieces had a iTouch. I had never played withe the iPhone or iTouch at this point so when handed one I gave it a drive. First I ran some YouTube videos. A soccer clip of at the time Manchester United player Christiano Ronaldo. Connected to the house wi-fi it performed really well, which was an eye opener compared to previous experiences on my Windows Mobile phones, which frankly you just did not try. then with the wave of my fingers I cruised around the iTouch software. Soon I landed on what I viewed as a boring feature “The App store”, then with a simple touch if my finger a new world was opened up.  At first I could not believe how fast I was moved from one screen to the next and then all the options available to me, either for free or for purchase.  The categories available, the large number of apps available was all very impressive and very different from my previous experiences with mobile applications.

Prior to the app store developing apps for mobile devices was painful and not very profitable.  The first problem was which mobile phone did you write to?  Symbian, RIM, Microsoft, etc..Then their was the carrier issue as each carrier wanted to own the ecosystem.  I had to choose between Verizon, T-Mobile, AT&T, Sprint etc..it was a real pain in the ass.  Not to mention that by the time you broke it all down there was not much of a market to go after.  Then ever if you did write the app the user experience of finding the app and loading it was long and painful.  Lastly the applications you downloaded were not very good or enjoyable, largely because there were not that many available.  It led to one conclusion writing, selling and running mobile applications was for the world of mobile geeks, other than that don’t bother.  Apple solved all three problems by owning the ecosystems, providing lots of applications and making it easy for everyone to get access, find and download what they wanted to.

Now it seems everyone is playing catch up with Apple – Apple has over 500,000 applications, Google has 200,000 – 300,000 and beyond that not a whole lot of applications or excitement for the other players in the space;  Microsoft, RIM, Nokia etc..Microsoft is already discussing Windows 8 and including an app store for the OS.  One  question is how many successful markets will there be?  It’s apparent for the foreseeable future there will be two but a third?  I will be interested to see what a Windows 8 store means.  We are talking about the desktop after all and will it mimic the Android or iPhone app store with a bunch of free and low-priced apps?  This would mark a paradigm shift for the desktop as traditionally you bought apps that costs into the hundreds of dollars.    What will the Windows 8 tablet look like and will it be successful?  Another burning question are Windows developers like their counterparts in the Apple and Google world. interested in low-priced slash high volume sales?  The one thing I think Windows 8 does have riding for it, is it can be different, since it’s legacy is the desktop.  For RIM it’s harder as they are targeting just a mobile platform and thus cannot differentiate.  For RIM the future I believe is only a painful one.  Then there is Nokia.  I have yet to see or hear what their plans are – will they just consume off of the Windows 8 app store, thus ceding the whole app store revenue stream to Microsoft? It seems there can be only one here.  But that it the downside of Nokia letting Microsoft be their primary partner for the mobile OS will deprive Nokia ownership of the ecosystem.  Nokia can claim what it wants but its survival is dependent on Microsoft’s ability to deliver in spades.  More so from a sales and marketing front than a technology front.

Is there another paradigm to be explored?  Something around the corner we have not seen yet?  Without question there is, but I think sometimes we think it is something not invented yet, when many times it is something from the past yet re-hashed and improved.  The mobility phenomena will continue to evolve. We are always connected but the experience will continue ti improve as 4G technology becomes more prevalent.  Before you know it we will be up to 5G and 6G (if it is still called that).  The traditional software pricing structure of 90% margins is being torn down and that will continue as new indirect revenue models take its place.  It is just beginning in the area of mobility.  Soon you will hear of huge revenues from mobile advertising used to subsidize software development.  Ray Ozzie at Microsoft discussed this in his first memo at Microsoft.   For some it is just hard to take the plunge.

The App Store craze is here for now and how long it will be is hard to say, but how we acquire our digital delights will move away from packaged software, similar to how we download music today or stream movies.  The winners will be those who committed and as we see in Apple’s earnings calls probably has already been determined.  The key to success will be creating an experience that us simple and useful.  There still is opportunity in the areas of the cloud, in particular in small and midsize business and the enterprise.  There are companies making their imprints, such as Salesforce.Com, Amazon and Rackspace, but the game is still wide open.  It’s interesting to note in the last decade how the cutting edge of technology has moved from the ivory towers to the hands of our teenage kids and the impact it’s had on traditional tech powers.  The days of home desktop productivity software at $500 are over as the app store has created a mass market shift in how we consume our software and how we expect it perform.  There are those who can choose to take the plunge into the deep or perish in the tidal waves that follow.

Good Night and Good Luck

Hans Henrik Hoffmann August 23, 2011

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