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Mobile : Big Wheels Keep Turning

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It seemed just a few months ago that many in the Valley were griping that the mobile app ecosystem was dying.  Looks like that might have been overblown.  Today’s WSJ online has right at the tippy-top two interesting articles on the continuing growth of mobile generally, and mobile apps in particular.  There was a lot to digest.

First, revenue from mobile apps continues to surge–according to Gartner, app store revenue is expected “to rise 62% this year to $25 billion.”  At the same time, the battle to attract and retain new users is definitely getting more challenging, with the WSJ citing “double digit year-over-year” growth in the cost of acquiring users through advertising.  Big growing market, and an increasingly maturing and sophisticated ecosystem of marketing and promotion services gaining hold.

My view: this market is nowhere near saturated and new entrants have opportunities.  The data support this, as only 63% of apps used daily now differ from those used a year ago.  Beyond this quantitative signal, the WSJ provided I thought an interesting qualitative look-see at what a dozen or so business leaders, athletes and entertainers saw as their key go-to apps.  What struck me here is how relatively homogenized the choices were: a few users of Notes (the iPhone bundled note-taking app), Evernote, Uber, a few different news readers.  (Interestingly, Angry Birds was cited by several as being so addictive that these users had to delete the app from their phones.)  This to me speaks to the increasing opportunity for developers to continue to build and deliver valuable services via mobile smartphones and tablets.  Of course, with 700,000+ apps on the Apple and Google stores, discovery will remain a challenge.  But given the continuing growth and the fact that so many daily use apps weren’t used a year ago, the opportunity environment has upside.  Big risk, big potential reward.

The second theme in these articles in the WS was what it called the “evolving economics” of apps. The basic thrust was that app developers are experimenting with different price points and monetization schemes across different app ecosystems, Android, IOS, Windows Phone, etc.  This trend is one I absolutely see.  It’s also one that I think has a lot of room left to run.  The WSJ discussed mainly purchasing price points from an app store.  That’s kind of basic, obvious.  What’s coming is, I think, price testing and discrimination based on different usage in the app.  Power packs, premium features, etc, will get tested and offered at different price points for different user types.  Also, expect new developer infrastructure, offering real-time testing and debugging, A/B routing and others to evolve to improve the flexibility in offerings that developers have on this front.  Early stage startups like Appurify and Leanplum are examples to watch in this space.  Others in the continuing integration (CI) and the platform as a service (PAAS) will help here too.

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