The Wide World of Apps

Mar 16, 2011
5

Are apps a trend or are they here to stay? There has been plenty written and talked about regarding the so-called phenomenon of the app ecosystem. Developer conferences, trade shows, meet-ups and more have all popped up over the past few years as people have recognized the app economy and looked to capitalize on it. I believe apps are a vital part of the software ecosystem going forward, and here is why.

The Role of Software
If you look back at the history of computing all the way from the mainframe, mini, microcomputer, desktop, notebook etc it has always followed the same value chain. Hardware, software and then services. This evolution started with fragmented hardware which then became standardized. That was followed by the rise of software which was also standardized to a degree, but most importantly software was developed which took advantage of the standardized hardware. Lastly the value chain moved to services. Services were the glue that tied the software and the hardware together.

We can debate about where we are currently in this value chain, especially because all three elements are in existence, yet there is still little standardization among them. Nonetheless, if we are to look at what is driving consumer buying decisions with next-generation devices, we see how much software or apps are currently influencing the buying process of consumers.

Why is this interesting?
For starters it's very interesting to developers. Way back, before smart phones and tablets, when all we had was a clamshell PC, the availability of 100's of thousands of software applications available for their PC was rarely part of the mainstream consumers' purchasing process. In fact, our firm had done some research and found that at most mainstream consumers used less than 5 applications regularly on their PC. Knowing that, how could developers make a strong case to continue to emphasize their work developing for the PC when they were competing for such little consumer mindshare?

This has all flipped in the new app economy. Many consumers we talk to browse their app stores 3-5 times a week looking for new applications and have on average 12-15 applications installed at any given time. Interestingly, the number of apps on smartphones used daily is still similar to the numbers I shared with the PC, averaging 4-5, but we anticipate that number will go up as the market matures.

It is also interesting as apps may play a role in what keeps consumers loyal to a platform. Once you have made investments in that platforms ecosystem of apps perhaps consumers will be less likely to jump to new platforms where new investments in the ecosystem are necessary. This is the philosophy of sunk costs, to which i'd like to explore more at a later time in regards to hardware.

Even though I still consider us as being relatively early in the software value chain it is growing much faster with smartphones and tablets than with PC's at a similar stage.

This is exciting for developers, consumers and manufactures and again it's only the beginning.

* Stats are from Creative Strategies, Inc internal research

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