david card, vice president research, gigaom
DESCRIPTION
Shape the Future App Economy of Europe Workshop / Brussels, Belgium / 14th June 2013 David Card is Vice President for Research at GigaOM Research. His expertise is as an industry analyst (and manager) covering the intersection of media, technology, and consumer behavior. His specialities include customer segmentation, competitive analysis, go-to-market strategies, market forecasting. Previously, David has held lead roles in Jupiter Research, International Data Corporation and Electronic Business magazine.TRANSCRIPT
Eurapp Study Early Results
David Card, VP Research14 June, 2013
Shape the Future of the European App Economy
Agenda
• European app ecosystem• App developer characteristics• Platform requirements• New platform adoption patterns• Bottlenecks for the European app economy• Measuring success
European App Ecosystem
OS suppliersAPI suppliers
Devices
Social
Mobile
Smart TV
ISVs
New PlatformsEnvironment
App Developer TypesOriginator
IT Developers
Cottage Industry, Hobbyists
Aftermarket
App Stores, 3rd party app-discovery
Revenue/Monetization• Consumer spending• Business spending• Advertising• In-app spending (virtual
goods)
Jobs created
App Developer Characteristics
450,000-500,000 jobs created in US since 2007
2012 GigaOM Survey with App Developers Alliance (cottage industry)• 2/3 1-3 person firm• 60% developing paid mobile apps, 25% developing ad-supported apps• 40% part-time• 60% under 4 years experience
• US– Some post-grad work or degree – 29%– Average salary $56,000
• W. Europe– Some post-grad work or degree – 41%– Average salary $35,000
• Asia- Pacific– Some post grad work or degree – 42%– Average salary $42,000
Platform Basics
• Platforms: APIs and services• Must be win-win-win: originator, aftermarket, user• Network effects:
– Increase with participation– Lock-in– Winner-take all markets
• Key tactics: – Supply lower-cost technology– Create habitual usage – Drive customer acquisition– Enable service syndication
Representative Social Platforms
Spotify Facebook Google+ Twitter LinkedIn
Audience ✓ ✓✓✓ ✓ ✓✓ ✓✓✓Core tech ✓✓ ✓ ✓Data ✓✓ ✓ ✓✓✓ ✓✓Revenue streams ✓ ✓✓ ✓Tools & support ✓ ✓✓ ✓ ✓Discovery & distribution
✓✓ ✓✓
Syndication ✓✓✓ ✓✓✓ ✓✓ ✓
Key: checks represent relative strength of platform offering from developers’ perspective
Source: Smith's Point Analytics/GigaOM Research, 2013
Smartphone Crossover on the Horizon
2012 2013 2014 2015 2016 20170
50
100
150
200
250
Smartphone Shipments, 2012-2017
North America Western Europe Japan
(mill
ions
)
Source: GigaOM Pro U.S. consumer survey, 3/12 N = 1,165
Cashed in a digital coupon
Made a payment
Posted photos to the web
Posted to a social network
Downloaded an app
Browsed the web
Viewed a social network
Played a game
Took photos
SMS
0% 10% 20% 30% 40% 50% 60% 70% 80%3%
3%
13%
14%
18%
19%
21%
22%
34%
40%
46%
6%
6%
26%
29%
38%
39%
43%
44%
69%
61%
69%Regular Activities on US Phones
Smartphone OwnersAll Phones
% of online adults with mobile phones
Question asks: Which of the following activities did you do monthly or more frequently on a mobile phone? (Select all that apply)
Smartphones Changed US Mobile Usage
Source: Internet World Stats, 2012
Facebook Adoption Passing 50% in Europe
Mar-11 Jun-11 Seo 2011 Dec-11 Mar-120
50
100
150
200
250
Facebook Subscriber Growth
Europe Asia North America
(mill
ions
)
Source: GigaOM Pro U.S. consumer survey, 3/12 N = 712
Look for datesSeek or offer job opportunities
ShopListen to music
Share news storiesLocal event information
Professional communicationsFind out about entertainment
Read news storiesPlay games
View or post photosCommunicate with friends
0% 20% 40% 60% 80% 100%
4%
6%
7%
9%
12%
13%
14%
14%
17%
24%
46%
79%
Regular Activities on US Social Networks
% of online adults using social networksQuestion asks: For what purposes do you use social networking sites regularly? (Select all that apply)
Communications, Photos Still Dominated Social
Source: GigaOM Research, NextMarket Insights, 2013
Smart TV Platforms Just Getting Underway
2011 2012 2013 2014 201505
101520253035404550
Smart TV Shipments, 2011-2015
Europe North America
(mill
ions
)
Bottlenecks for the Eurapp Economy
• Environmental– Platform concentration: US
companies dominate– 3+ year lag in adoption– Fragmented markets– Conservative investors,
entrepreneurs
• Technical– Cross-platform development– Dev tools, open source– Native language support tools– Lagging 4G– Data portability
• Business and Financial– Immature ad market– No standard ad measurement
“currency”– Unwillingness to pay for apps– Low-priced apps– Customer acquisition costs– Access to capital
• Resources– Fewer developers– Lower salaries– Lack of business expertise at
tech startups
Early Feedback on Bottlenecks
• Interviews with platforms, aftermarket, developers• Consensus: app developers need more support on business
development (marketing, monetization) than tech
Key Business and Financial Bottlenecks:• Revenue opportunities: direct fees seem more immediately
desirable than advertising• Marketing assistance: promotion/discovery, search advertising and
other marketing• Expansion into additional national markets• Expertise and/or platforms to support local currencies, taxes,
different carrier or platform policies, etc.
Measuring Success
• Independent Software Vendors– Revenue– Downloads; monthly users– Franchise expansion– In-app purchasing patterns– Brand lift
• IT Developers– Adoption by employees,
customers, partners– Market-specific objectives (e.g.,
reduced customer service costs, increased transactions, etc.)
• Cottage Industry, Hobbyist Developers– Similar to ISVs on reduced scale– Ability to attract funding– Growth as exit path to IPO or
acquisition
• Sustainability– Critical mass– Path to maturity – Extended product portfolio– True hobbyists: provide for own
personal income, not lasting business
Takeaways and Next Steps
• Platform growth will take care of itself• Are the platforms providing the necessary ingredients for the
ecosystem?• Who can assist with the business and financial bottlenecks? How?
• Two surveys– Independent app developers– IT app developers
• Feedback for the aftermarket model and jobs profiling• Input into the crowdsourcing exercises
On to the workshopping!