The State Of Mobile And The App Economy In 2015


Elad Natanson, Contributor

May 27, 2015

It’s no exaggeration to say the rise of smartphones and mobile technology is affecting our lives and changing how we interact with each other and with the world in profound ways. Who knew a few short years ago that we would be able to get a ride (Uber), find a place to sleep for the night (AirBnB), or chat in real time with anyone, anywhere in the world (WhatsApp), instantly, any time we wanted to, using a device we hold in the palm of our hands. Applications such as these are gaining hundreds of millions, if not billions of users, and as businesses, they are experiencing faster growth than any the world has ever seen.

How can we put into perspective how fast and how far the mobile economy has come in such a short period of time? One internet titan that correctly judged the world’s shift to mobile is Facebook. But they didn’t succeed right away. As recently as 2012, Facebook had a failed mobile strategy in which they tried to use a universal mobile web platform rather than build native apps. They shifted to native apps for iOS and Android, and their mobile usage skyrocketed. Recognizing that apps need to be focused, simple, fast and easy to use, they subsequently “unbundled” key functions like Messenger, and acquired both Instagram and WhatsApp, two of the most dominant and widely-used mobile apps. As a result, in only three years Facebook’s mobile advertising revenue went from almost nothing to over 70% of all of its ad revenue. By being willing to “disrupt itself” and separate into a cluster of stand-alone apps, Facebook has successfully transitioned to become a mobile-centric platform, and it is only beginning to reap the benefits.

The mobile universe and the app economy are growing so fast and evolving so rapidly, sometimes it’s hard to make sense of it all, much less sniff out opportunity. As the founder of Appnext, a discovery platform for mobile apps, I am lucky to have a privileged vantage point to view the marketplace and identify key trends. To get started, here are five key areas/sectors of the app economy that I think are important to understand in 2015:

  • Service apps – not only our browsing habits, but also our entire lives have become increasingly mobile. More and more apps address our offline needs with native mobile solutions – from car ordering apps like Uber and GetTaxi, to delivery apps like TaskRabbit and straight-forward mobile commerce and food delivery apps like Seamless. Although they have grown exponentially in popularity, the service apps have yet to reach a tipping point where they become a completely integrated brick and mortar ecosystem and no longer seem like “apps.”
  • Apps as content – the nature of the mobile user experience is drastically different from that of desktop. Limited screen space, almost intuitive navigation and risk of information overload make relevance the most important parameter when it comes to mobile content discovery. In this regard, apps will gain more and more prominence in the content recommendation field. The authentically native mobile format will be recommended and consumed in context of other user interests, articles recently read, search queries etc. 
  • The app install business – this will continue its rise, bringing diversified revenue streams to apps and mobile websites. At the same time it will remain a separate revenue channel rather than blend in the currently employed adtech monetization strategies. Unique by nature, it requires designated serving solutions, optimization and tracking capabilities that will be mostly addressed by the managed service providers, entwining app install ads with the existing inventory sales funnel. 
  • Cost structure will change – up until now, development costs accounted for a substantial part of starting and maintaining an app venture. Yet, currently the development costs are increasingly declining due to the rise of robust Do-it-Yourself solutions and more and more seasoned app developers on the market. The cost center is now shifting towards app discovery. The densely populated app stores, variety of new platforms and devices will force app businesses to look for alternative modes and channels of discovery.
  • Mobile websites are not doomed – despite reports claiming that 70% of the time spent on mobile is spent in-app, it is wrong to say that the apps will become the only acceptable mobile format. Mobile websites will remain essential when it comes to web browsing and new searches and as such will continue to serve as an increasingly important revenue stream. That being said, from the client life cycle perspective, a mobile website will serve more as the opening gateway for a searching user while the satellite apps will help nurture the loyal clients and upsell.

I look forward to sharing more of my thoughts with you in a series of pieces that will further explore and illuminate different corners of today’s mobile landscape and help inspire you to find your own profitable app opportunities in this incredibly exciting arena.

This article was written by Elad Natanson from Forbes and was legally licensed through the NewsCred publisher network.

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