As smartphones have come to dominate the sales of all communication devices around the world, the number of smartphone apps in various online stores has skyrocketed over the last few years.
While existing online and web-based services are being developed for mobile devices, small independent developers are trying to carve a valuable slice from the ever-growing application sales cake.
SMARTPHONES TAKE OVER
According to technology research firm IDC, 144.9 million smartphones were sold worldwide in Q1 2012, while total sales of smartphones topped 491 million units in 2011. Gartner estimates total sales of smartphones in 2011 to have reached 472 million, or 31% of mobile communication devices. This compares with figures for 2010 from the same company of 297 million smartphones, 19% of the 1.6 billion mobile phones sold that year. Regarding current operating systems, the global market was dominated by Google’s Android in Q4 2011 with a 59% share, followed by Apple’s iOS with 23%. No surprise, then, that the focus of app developers has turned towards these two giant markets, as can be seen very clearly from the numbers. Apple’s App Store opened in July 2008, aligned with the release of the iPhone 3G, and took over the duties of the iTunes Store opened five years earlier. According to the latest figures from June 2012, more than 650,000 applications were available in the store with more than 30 million total downloads. Google started its service relatively late. In March 2009, about 2,300 applications were available in the Android Market. However, supply expanded fast and, by June 2012, the number of available apps exceeded 600,000 with more than 20 billion downloads.
To make huge earnings out of a simple idea is every developer’s secret dream, at least at the beginning. That’s why the developers scene is filled with “gold diggers” who want to make the big shot and earn millions with a single app raised high by the community, which is always looking for something new and fancy. A fine example of how to turn a simple idea into huge money is Draw Something, which was downloaded 50 million times in the 50 days following its release and was bought by the Facebook game giant Zynga for $180 million. At the top of the app lists, Angry Birds still reigns supreme: the castle-crusher game has generated more than 1 billion downloads on all platforms combined since its release in December 2009, and has became a cultural reference all around the globe.
Trends change from season to season, just as on the catwalks of Milan. “As far as I can see, location-based apps are quite popular now and everybody wants to share something through social media platforms. The phones still have a bigger user base than tablets, and of course the two most popular operating systems in the mobile world are iOS and Android, although Windows Phone 7 and 8 might soon become popular,” said Gergely Cziva, managing director of a small independent business, Artanis.
Various video and photo manipulation services are popular too, probably due to the enormous success of Instagram, an image manipulator and sharing app that was acquired by Facebook for $300 million in cash and 23 million common Facebook shares, now worth roughly another $400 million. But having a great idea and some spare time to develop an app is not enough for success – or at least that is what the harsh facts show. “The biggest problem for individual developers is that you also have to provide design and must work for at least two platforms on a professional level,” Hungarian app developer Canecom’s Márk Kubatov said. “Because of this, development teams and agencies are doing better since they can provide all the necessary knowledge and services for clients,” he added. And revenues are not in favor of individual developers.
So developers with more foresight are looking for opportunities that provide a more predictable source of revenue, such as existing services that need professional assistance to be ported to various mobile operating systems. “We see businesses finally starting to realize the potential in mobile and now thinking about ways to enter the mobile market, providing their services through apps and mobile web. But they lack the concept of mobile presence, so we help them design their apps and mobile websites to provide the best user experience for their customers,” Kubatov said. And he knows a lot about the phenomenon as Canecom developed the official apps for Hungary’s best known festivals, including the Sziget, Volt and Balaton Sound events, and also the mobile version of Vatera, the “Hungarian eBay”.
While a recent study by App Promo showed that 59% of iOS apps in the App Store did not even generate enough revenue to cover development costs, the development of apps based on the specific orders of clients could make a decent earning. “I do not think the market is full, especially not in Hungary. There are already three or four famous app development teams, several agencies and a pack of independent developers. But mobile app development is quite new in Hungary, and the first mobile development course just started one year ago at universities,” Cziva said.
And the market is full of opportunities as it turns towards more serious fields beyond the never-to-be-tired-of games, weather forecast and social media apps. “As far as I can see, the next step will be the development of business apps like ERP, BI or CRM for mobile devices,” Cziva says. There is also a particularly interesting and fast-growing area: apps that never go public. “There is growing interest in internal apps for companies, ones that only employees or partners will use, like tablet apps for sales and service personnel to name just a few examples,” Kubatov added.
FOR THE BRAVE
As the market is expanding and is full of new ideas and business orders, independent developers can make quite a nice living out of app development. However, most realize that management of their work and communication with clients is taking ever more time as they expand their portfolio. “If developers can score a few long-term customers who provide work continuously, they can survive for a long time,” Kubatov said. Actually only very few large companies hire mobile developers as employees, as it is more cost-effective to outsource the mobile development work to professional teams who design and create lots of apps and are constantly up to date on this particular field. In Hungary, there are only a few mobile development teams that have already acquired vast experience and an international portfolio that the client can pick from. In the future there might be some acquisitions from larger agencies, or maybe some smaller teams will merge to expand faster. But there is still quite a lot of “terra incognita” for mobile app developers, where the brave and the well prepared can make their fortune.