In his Easton keynote address last month, former Vodafone CEO Arun Sarin gave his projection that the biggest growth driver in the mobile industry over the next six years will be the content -- that is, the “Apps.” (If you haven’t yet seen his keynote address, check it out here – it’s even mobile friendly!)
In this blog post, I’ll be giving a quick high-level overview of the process of developing and releasing an app, geared primarily to the folks without a software development background.
A Brief History of the App Market
The term “App” and the mainstream adoption of mobile phone applications dates back to Apple’s introduction of the App Store in 2008. However, mobile phone applications did exist before then, although the distribution channels were tightly controlled and adoption was very limited.
Before the App Store’s debut, the app market has heavily curated and thus the barriers to entry could be very high. Apple, on the other hand, lowered the barriers to entry – all that was required was a business license and a $99 payment, which resulted in a huge growth of supply.
Google launched their own store for Android phones shortly after Apple’s, and Microsoft launched one in 2010, all having largely the same business model.
The App Market Today
Today, there are several major smartphone platforms, notably iOS, Android, Windows Mobile, and Blackberry. The market is a rapidly moving one, but at present, iOS and Android largely dominate the “demand” side of the market:
Source: Canalys. Data from 2013.
The number of apps downloaded by the users of the two major platforms largely corresponds to this, but interestingly, revenue on iOS exceeds Android:
Source: Canalys. Data from 2013.
It’s also become a very crowded market – something we’ll discuss again shortly.
Developing Your Own App
Okay, so you’ve got a fantastic idea for the next killer app, but what now? The first few steps are pretty much the same as you might do for any product, even a non-technical one. First, you should first evaluate the competition. Are there other apps that do the same thing? (If you’re not sure, spend a little time searching Google and the App Store or Google Play Store.) If there are, what is your competitive advantage?
Second, create a mock specification and design. Even just some whiteboard or paper sketches of what the app should look like will be helpful here.
Hiring a Developer
Unless you’ve got the appropriate technical background (which I presume does not apply to most readers of this post), you’re going to need a developer to build this product. Fortunately, you don’t have to hire anyone for the long term if you don’t want to – you can find plenty of contract developers online. This Forbes article talks about different methods of acquiring developers for the web, but it’s just as true for app development.
However, for those not familiar with the developers’ side of the market, there are two common misconceptions we should address:
First, most developers will not work for free, or even for a portion of profits from your product. You’re very likely going to need to shell out real cash for these services.
Second, even though some of the different mobile platforms look very similar on the outside, under the hood they can be entirely different beasts. While sometimes bits and pieces can be shared, developing for two or more platforms (like iOS and Android) can require double the effort – you may even need a completely separate developer or development team for each platform!
I do want to mention that you should absolutely consider some Quality Assurance (QA) testing of your product before you ship it. At a minimum, find some friends or members of the target market and have them test your app for a little bit. At the high end, there are professional QA services available. It’s very likely you’ll find some bugs or usability concerns that you’ll want to address before you ship the product out. A nasty bug can really ruin a product launch.
So now you’ve got a killer product and you’re ready to ship. Well, I’ve got good news and bad news – the good news is that it’s easy to get that product to market, as the barriers to entry are very low. Unfortunately, that’s also the bad news! When the App Store first launched, there were few apps and it was almost like Field of Dreams: “if you build it, they will come.” However, today, because the market can be so lucrative and because of the low barrier to entry, the app market has become a very crowded one: Apple’s App Store had over a million apps as of October 2013, so there’s a lot of competition for users’ wallets. Marketing and advertising are key.
The absolute best way to reach the most customers is by getting preferred placement on the App Store or Google Play Store. For this, you will need to reach out to Apple or Google can give them a good reason why your app is a killer app. However, this is a task easier said than done -- competition for these preferred slots is fierce, and they are difficult to acquire… but remember that these App Stores are operated by companies who are looking to move new hardware, so if your app can show off some of the new features of a new hardware or OS update, all the better.
The second best way is via mobile marketing – that is, advertisements served directly to the user on their device, such as Apple iAds. You can, of course, advertise your app via non-mobile channels, and many people do, but the conversion rate is lower. Why? Think about the use cases: if a user sees an advertisement on their phone or tablet and clicks it, they can be taken to the store where they can purchase and download the app in just one extra click. But if they see it on a desktop, they have to buy it on the desktop, and then download it on their phone, or pull out their phone and search for the app.
Of course, there are plenty of other ways to market your app, but the advice begins to change based on the app and target market. For example, for a game, you might consider purchasing advertisements on or sending a review copy to a site like TouchArcade.com or PocketGamer.co.uk.
Of course, as an Anderson student or alum, you’re (probably) not doing this all for charity. Your app has real costs, and you need a real return to justify that. How do we make money on the app?
There are three methods: charging an upfront fee, in-app purchases, and in-app advertisements.
When the App Store first opened, the only way to earn revenue was to charge an upfront fee – for example $9.99 to download your app/game. As competition heated up, prices dropped rapidly until the majority of apps were just $0.99 cents. Today with all the options available, it can be difficult to convince a user to plunk out a lot of cash upfront for a premium application. Also, note that most stores will take a 30% cut of the sale in exchange for handling the transaction.
The second, and currently very popular method, is to charge via in-app purchases. In this model, known as “freemium”, the application is free to download, but certain features or items require an additional purchase to unlock. This can be an easier sell – the user presumably already has and is using your app, and understands the value proposition. Like the first model, most stores will take a 30% cut of the sale in exchange for handling the transaction.
The final method is via in-app advertisements. Essentially, you display or rotate ads and receive revenue for views and clicks, just as you would for ads shown elsewhere. The exact financial terms of these deals can vary greatly.
Note that you can mix and match these methods – you can, for example, have a $0.99 app with ads and in-app purchases, as one of the apps I developed has. Of course, there’s no one-size-fits-all solution here, so you need to figure out what works for your app and business model.
I hope this brief overview of App Development has been a useful one. If you’re an existing Easton student or alum who has developed an app, or has some tips to share, please comment. We’d love to hear!