Examining developer strategies in a brutal app economy

ComScore made headlines last week when it reported that while U.S. consumers are spending more time than ever using mobile applications, most users depend on a just a handful of titles. A tiny 7 percent of users are responsible for nearly half of all smartphone app downloads in the U.S., while nearly two-thirds of U.S. smartphone owners don’t download any apps in a typical month.

As I noted briefly last week, there are plenty of factors that help explain the so-called app fatigue that first surfaced more than two years ago: Both Apple’s App Store and Google Play each offer more than 1 million titles, making discovery of truly valuable offerings a painful and time-consuming process. Apps not only consume valuable memory on the phone, those that run in the background – and there are more of those than most users realize – can eat into precious battery life in a big way. And the novelty of toying with new apps has surely dissipated for many users.

It’s probably no surprise, then, that VisionMobile reported earlier this month that roughly 70 percent of mobile app developers don’t earn enough to make development a full-time job, and that 90 percent of Apple’s record App Store revenues in July went to just 12 percent of developers. But VisionMobile also found that the number of developers creating mobile apps shows no signs of declining. While the gold rush of smartphone apps may be over, some compelling options exist beyond creating entertainment-focused apps for the U.S. audience and cramming them into the popular app stores:

  • The Internet of Things. A wide range of connected gadgets is already coming to market that includes everything from wearables to in-dash systems to healthcare monitors to appliances. Many of these devices will serve as stand-alone platforms for apps; others will be connected via smartphone apps. We’re sure to see plenty of early entries in this market crash and burn – I’m particularly skeptical of the short-term prospects for many wearables – but some will thrive based in part by the apps they leverage.
  • Emerging markets. While smartphone sales in China may be peaking this year, penetration is still low in India and other promising regions. And in many of those areas high-speed (3G or 4G) networks are just beginning to come online, which will boost mobile data consumption considerably. Building apps for users in foreign countries can be challenging considering the cultural and linguistic differences, but opportunities are big for developers who can overcome those hurdles.
  • Productivity and the enterprise. U.S. consumers are up to their ears in mobile apps, but the market for enterprise mobile apps in North America and Western Europe is only beginning to get legs and remains untapped. And growth should occur steadily over the next few years as businesses increasingly support not just smartphones and tablets but a variety of other connected devices.
  • Oversized tablets. Many popular entertainment apps for tablets are essentially blown-up versions of their smartphone-based counterparts, which makes sense considering the converging trends of smaller tablets and large-screen smartphones. I’ve long thought a market exists for an oversized tablet, though, and Bloomberg reported this week that Apple will launch an iPad with a 12.9-inch screen early next year. Such a device could serve as a great platform for a wide variety of more immersive and sophisticated apps, from games to a productivity and enterprise.

Independent developers can still find success in the big app stores, of course, as the creator of Flappy Bird demonstrated earlier this year. And there are some key ways developers can get as much life out of their apps as possible, as we highlighted in a Gigaom Research report several weeks ago. But savvy developers willing to branch out beyond consumer-focused entertainment apps will stand a much better chance of making a living over the next few years.

Relevant Analyst
Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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