news
Technology | DOI: 10.1145/1995376.1995383
Gary Anthes
invasion of the mobile apps
The market model pioneered by Apple and others is transforming the software
world—and has profound implications for software companies and their customers.
SOftWare startUp spring Partners had 40,000 cus- tomers in March 2010. Fourteen months later, it had 1. 6 million.
The 3,900% increase in business
is far from unusual these days. The
Charlestown, MA-based company is
just one of thousands of mostly small,
entrepreneurial firms that have by-passed traditional methods of development, marketing, and distribution in
favor of the new online app stores run
by Apple, Google, and a few other software and communications giants.
Market-research firm Gartner predicts that mobile app stores will serve
17. 7 billion downloads this year, up
116% from an estimated 8. 2 billion last
year, and that application downloads
will soar to 185 billion by 2014. Developers will see more than $15 billion
in revenues in 2011 from their mobile
online apps, both from download fees
and advertising linked to the downloads, according to Gartner.
Today, a stroll through the app
stores is a little like visiting an urban
flea market, where there are first-rate
products but where low-price goods of
dubious value abound, and support is
practically nonexistent. But suppliers
to app stores say the sophistication,
utility, and price of the software is increasing, crowding out the junk. As a
result, the nascent business model
can be seen as a warning to consumer
software companies that today sell
shrink-wrapped software and whose
development cycles are often measured in years.
The financial models and philoso-phies of the mobile app companies
vary widely. But they all cite the same
benefits of the online stores: low operating costs for development, marketing, distribution, and support, and
low capital requirements for getting
into the game. What follows are mini-profiles of three very different compa-
apps for the iPhone and other smartphones are soaring in popularity—and creating
economic opportunities for countless app developers and software companies.
nies—Spring Partners, a venture cap-ital-backed startup; Instant Cocoa, a
hobby turned two-person startup; and
Nuance Communications, an established software company—that claim
success at the online app stores.
spring Partners
In mid-2008 Spring Partners landed $5
million in venture capital and in January 2009 launched a free Web-based
application called Springpad, a service
for “saving anything you want to remember.” Things you see online, such
as a recipe or a book review, can be
cataloged and saved in a personal database. In March 2010, Springpad for the
iPhone was launched at the Apple App
Store; in May 2010 it appeared at the
Google Android Market; in June 2010
Spring Partners had it for the iPad; in
December 2010, v2 of the Web app
launched in the Google Chrome Web
Store; and in May this year Spring Partners announced support for Google Android tablets and offline access through
Google’s Chrome browser.
All versions of Springpad are free.
Spring Partners says its revenue, which
it won’t divulge, comes when users
take action on something they have
saved in the Springpad database, such
as buying a book. It says 2%–3% of its
users generate tiny slices of revenue
that way each month.
Although online stores take a cut of
the sales price, which is typically 30%,
they are otherwise a free distribution
mechanism for software developers,
and that is perhaps the greatest enabler
for small startups. But, says Jeff Janer,
cofounder and CEO of Spring Partners,
it can take substantial effort to get a
product high enough in a store’s rankings to keep it from getting lost among
the competition. “We reorganized the
company last summer so that everything we do, whether product development or business development or marketing, is focused on getting ranked
as high as possible. We spend a fair
amount of money on public relations.”
Springpad was developed as a single service, then ported as a native
PhotograPh by Daniel go
