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Are Google and Apple too dominant on mobile?

The battle for the OS in the PC world has pretty much been at status quo for a few decades, save for some slight growth of Apple’s OS.  For mobile it may seem we are moving to a similar duopoly, and  a key question to ask is how Google and Apple have managed to get such dominant positions in the mobile space. To point to how they have focused on apps to capture consumer’s attention is an oversimplified view, as it really has to do with looking at offers across the entire eco-system that is mobile, with differing strategies that has delivered different results:

Source: Mobile Megatrends, Vision Mobile

Source: Mobile Megatrends, Vision Mobile

For Apple the formula has been simple, in that they control everything, from the OS, to the store, to the handset and features, to the business models. For Google, the answer is more complex, and it really comes down to the decoupling of the operating system of Android to the apps and services offered on Google Play. This is very well explained in Vision Mobile’s Mobile Megatrends report, which shows how Google has moved key services such as maps, search, mail, authentication/sign-in, in-app billing, sharing APIs, remote wipe, etc, etc).

The question then becomes to what extent should this sort of domination be allowed? To what extent do you put Google through the same scrutiny Microsoft was put through over a decade ago?  Interestingly, while Microsoft was forced to open up for any browser on a paid proprietary platform, such scrutiny has not been awarded to Google on a platform that theoretically is open but which is clearly locked in. To what extent is a browser different from an in-app billing engine when soon 90% of revenues come through this mechanism? Yet for a few landmark attempts from competing app stores like Aptoide, and probes by the Australian news media, regulators seemingly are taking little action.  You could also make the case that despite being closed (as Microsoft has been), Apple’s iOS is now big enough to be awarded the same scrutiny the Windows platform was put under.

Don’t get me wrong. I am an Android fan to the hilt, and love what Google has done. But at the same time I see what a hindrance it is to dictate APIs and tie things to one store, especially for smaller developers who simply do not have time and resources to maintain a huge number of SKUs of their app in order to fully distribute it globally. The complexity of the business rules and the share number of payment SDKs to maintain is a stretch even for larger players.  I love Amazon too, but if Amazon had made a construct where most suppliers of household goods, clothing, electronics etc could only distribute through (unless they were megabrands and had the power to distribute elsewhere) I’d be pretty upset with as well.

Android developers have enough fragmentation to deal with, as Ben Evans points out in an excellent post. Fragmentation in hardware and operating systems is hard enough, but couple it with fragmentation in business models, created by artificial and constraining rules about what you can and cannot use to be visible in an online store, seems worthy of some scrutiny. Perhaps time for Super Mario (Monti) to return to save an industry currently dominated by games.

Disclaimer: The views expressed on this post are mine and do not reflect the views of any clients or companies I am currently working for or have worked for.

Posted in The Business of Mobile.

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Tired of apps? There’s an app for that!

“The mobile browser is dead. Long live the app!” touts Forbes in a recent article. 86% of time is spent in an app instead of a browser.  What went wrong? Well, nothing really, this is just what was coming for a long time (like I’ve been saying for years as well).  While the mobile browser is perfectly suited for consuming information, there are a number of factors driving app usage:

  • Majority of app usage is gaming. Mobile browser gaming kind of sucks (do you even remember the name of one?)
  • Contrary to popular belief, designing a well functioning HTML5 with lots of navigation bells and whistles is not cheaper than making an app (search for the Financial Times case study on this site)
  • HTML5 is just not there, and even if it gets “there” it will always(!) play catch-up to native apps who can much quicker and much more efficient take advantage of new device features

Source: Flurry

And the “appsplosion” is happening faster, as even distinct services create multiple apps to separate user activities or have better performance in their apps.  Or the real reason is possibly just to take up space on your device to push others out.  Of course as the number of available apps go up, so does the number of sub-par apps, and soon we find ourselves in need of something that cleans up what we don’t use, like the app Aviate.  Google and Apple are not doing anyone any favors either, with overloaded stores making it near impossible for users to find good apps, and the top 25 dominating everything as users are time poor and can’t be bothered searching.

Rodney Byfield in an article entitled “Customer integration in the App world” puts it well though:

There is a real need to harness customer input while leveraging the selection process in App development, leading to the thought that greater customer input leads to more acute selection, with the intention of creating a customer-centric product.

This is not a novel concept, in fact it is something that has been driving successful businesses for years. Except now it needs to get done in 5 square inches or less, and that is a formidable challenge. Furthermore I have seen little evidence of leveraging users in the app selection process, a technique we used in MoConDi back in the days when apps were referred to a midlets and app stores were wap sites.  I strongly believe the app fatigue that has already set in will open up formidable opportunities for those who crack the code for user involvement in app development and discovery – and the beauty is I doubt they will have to be constrained by what Apple and Google tells them to do…

Posted in The Business of Mobile.

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Goodbye PSMS?

The US operators (except Verizon which will likely follow suit) have dealt a death blow to the single most important factor besides the ringtone that enabled the mobile content market: Premium SMS billing.  Companies made a fortune on this market, often using questionable tactics to attract users ($5/week for 5 games, when you thought you were buying 1 game for $5), keep them subscribed for at least until the user acquisition cost was covered, and move on to the next user.

On a positive note…

Well, most of the dodgy ringtone providers are gone, and content has concentrated around mega app stores and alternate app stores, with carrier stores hanging in there. Premium SMS has really just been replaced by other options, whether credit cards on Google Play or iTunes, or with mobile operators and mobile direct billing.  Also, due to excessive costs, PSMS has actually been a deterrent to uptake of content purchases in most markets.  In the US, PSMS rates costs ranged from 40-50%, while direct billing rates range from 18-20%, and as such should be far preferred by content providers.

Direct billing however is far more superior method when it comes to user experience. When paying on mobile, you simply need to click a button and you are done. No need to send or receive messages and type cryptic codes. Direct billing is a true one-click experience and as such far better than any other method on mobile.  While the cost is still high compared to PayPal and credit card, for in-app transactions that range from $0.99-$4.00 typically, the difference is less than for higher priced items.

The downside…

But while direct billing is better, with it – at least in the US – comes very tight control by the mobile operators in terms of who gets approved as a merchant. In the “good old” premium SMS days you could connect through a wide range of resellers. This number has now been narrowed down to a few, and in addition you typically have to provide a list of each digital item you sell and get approval.   The industry certainly wins by removing dodgy content providers, but it will surely hurt for a while until the onboarding process of genuine merchants and developers can become smooth.

So do you need billing on mobile?

So as a developer you may just not care, and go with Google Wallet, PayPal or Amazon and be happy with it. And if you distribute your app through Google Play and Amazon, you actually do not have much choice in the matter. But if your downloads are increasingly coming from alternative app stores, and there are several with traction in the US, not having mobile billing is a huge loss simply because the ease of use which is so critical when you try to convert a $0.99 purchase decision.

If this trend catches on to other countries, developers are best to align themselves with service providers who have good inroads with the mobile operators, and can facilitate quick onboarding and approval of your app, so you can keep going as wide as possible with the most appropriate billing options.

Disclaimer: The views expressed on this post are mine and do not reflect the views of any clients or companies I am currently working for or have worked for.

Posted in The Business of Mobile.

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