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Previous Blogs

September 16, 2014
The Wearable-Identity Connection

September 9, 2014
The Password Dilemma

September 8, 2014
Insider Extra: SanDisk--Driving Flash Forward

September 2, 2014
Smart Connected Devices: A New Forecast

August 26, 2014
Phablets—aka Pocket Computers—Drive New World Order

August 19, 2014
Device Usage Diversity

August 12, 2014
New Life for the PC

August 5, 2014
Hot Items for the Holidays: Large Phones, Notebooks and Smart TVs

July 29, 2014
Smartphones: Life's Remote Control

July 22, 2014
The Joy of Vintage Tech

July 15, 2014
Digital Generation Gap

July 8, 2014
Virtualization Reborn

July 1, 2014
Portable Digital Identities

June 24, 2014
The Future of UI: Contextual Intelligence

June 17, 2014
Moving to Markets of One

June 16, 2014
Insider Extra: Dell and the Battle for Business

June 10, 2014
Screen Overload to Drive Screen-less Devices

June 3, 2014
Apple Drives Vision of Seamless Multi-Device Computing

May 27, 2014
Surface Pro 3: The Future of PCs?

May 22, 2014
Insider Extra: SanDisk: The Many Faces of Flash

May 20, 2014
The Technological Divining Rod

May 13, 2014
Computing in the Cloud

May 6, 2014
Device Usage a Question of Degree

April 29, 2014
The Next Smartphone Battleground: Durability

April 22, 2014
BYOD: A Work in Progress

April 18, 2014
Insider Extra: AMD Back in the Groove

April 15, 2014
The Mobility Myth

April 9, 2014
BYOD Dilemma: Devices vs. Data

April 8, 2014
Insider Extra: Qualcomm's Evolving Story

April 1, 2014
A Wearables Forecast

March 25, 2014
Measuring Success in Wearables? It's Thousands of Thousands

March 24, 2014
Insider Extra: Intel Strategy Moves Forward

March 18, 2014
IOT: Islands of Isolated Things?

March 11, 2014
Wearables Cautionary Tale

March 4, 2014
The New Platform Battle

February 25, 2014
Watch What Happens

February 18, 2014
Talkin' 'bout Touchpads

February 11, 2014
The MultiOS Conundrum

February 4, 2014
Computing Redefined

January 28, 2014
The Apple Problem

January 21, 2014
The 2-in-1s People Might Want

January 14, 2014
The Post Tablet Era

January 7, 2014
The Innovation Asymptote

December 31, 2013
Top 5 2014 Predictions

December 17, 2013
Holiday Shoppers Gifting Themselves

December 10, 2013
Companion Apps

December 3, 2013
Aisle Check
















TECHnalysis Research Blog

September 23, 2014
Is the App Ecosystem Sustainable?

The focus on mobility and mobile platforms as the growth engines for the tech industry’s future is now so engrained into most people’s heads that it seems nearly blasphemous to suggest there could be faults in that thinking. But there’s a question that keeps popping into my mind—is the mobile app ecosystem really sustainable at its size and rate of growth?

I’m increasingly starting to think that no, it isn’t.

Some simple math helps with my reasoning. First, we’re at well over a million (likely around 1.2 or 1.3 million) apps in both the iOS and Android stores. Yes, the revenue numbers paid out to developers keeps growing as well, but it doesn’t seem to be growing nearly as fast as the number of apps are. So, basic division would suggest the amount of payouts per app is decreasing. In fact, I’ve seen numbers which suggest that a large majority (>50%) of mobile apps make only a few hundred dollars a month.

Now, of course, some of this could be due to the fact that many apps have moved to a freemium model, where the app is free, but in-app purchases and advertising generate the necessary revenue for developers.  But in-app revenue still counts towards those revenue payout numbers that Apple and Google love to talk about, so the lower average per app still seems relevant.

With regard to advertising, mobile ads have notoriously poor click-through rates, so the amounts that ad networks, app developers and others selling advertising can charge on mobile devices is still relatively low.

So, as with many industries, it seems a tiny, single-digit percentage of applications and app developers are making the lion’s share of the revenues. Everyone else is just doing it for fun or holding onto the dream of being one of the very select few who do make it big—at least for a while—in the mobile app business.

Now, as an entrepreneur myself, I’m certainly not going to fault small businesses for having big dreams and hoping to generate a big financial windfall. More power to you.

But as a musician and someone who worked in the music business, I also know that 11+ years after the introduction of the iTunes store, we haven’t seen an explosion of new artists that have all reaped large financial gains. Instead, we continue to have a reasonable number of long-term popular artists, a few one-hit wonders and occasional breakthroughs of new artists that hit it big. Consider this, when Apple chose to release a free album to their hundreds of millions of iTunes users, they didn’t pick a relatively unknown new artist—they went with one of the most successful bands of all time. (Don’t get me wrong—I’m a big U2 fan and I wasn’t one of the people who wanted to delete their free album, but you get my point.)

The relatively harsh metrics of the music industry are widely-known, but I don’t see that same kind of thinking and logic being applied to the app ecosystem, even though—I think—they’re relatively comparable. The problem is, instead of being cognizant that it’s very difficult to make it big—as most aspiring musicians know and readily accept—mobile app developers seem to think that their paths to the top are paved with gold.

I believe some of this fault lies with tech investors, as well as the tech press, who promote the myth of mobile app millions, instead of the harsh realities that most mobile app vendors face. Of course, no one seems to want to burst the mobility bubble, for fear of what might be exposed. But it’s a story that needs to be told—and told—and told again.

The reason is, we’ve now reached a point where there are too many apps (yes, I said it) and there needs to be more focus on quality versus quantity. But if everyone involved seems to think building more mobile apps is their ticket to millions, the problem is just going to get worse. And that’s, ultimately, why I believe the app ecosystem could end up buckling under its own weight.

Until we’re all willing to take a more realistic look at both the pitfalls and opportunities in the mobile app ecosystem, I’m afraid we’re heading towards an implosion instead of the explosion that many still expect.

Here's a link to the original column: http://techpinions.com/is-the-app-ecosystem-sustainable/35033

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