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Wednesday, September 14, 2011

Mobile Apps: The Supply Side

9:33 PM Posted by Deepak Nayal No comments
It is no surprise that mobile phones have been a fast growing market for years now, but the smartphones have really propelled this market to greater heights. The global mobile phones market grew approximately 20% year-on-year in the first quarter on 2011, and most of it was attributed to the smartphones. In Western Europe smartphones shipments have already outpaced the feature phones, and US is not far from being a smartphones-dominated market. An important point to remember here is that though smartphones are growing at a stupendous rate, feature phones are still a huge market.

The greatest benefit of mobile phones is - obviously - mobility, and smartphones have leveraged this mobility by introducing the world to mobiles apps. Though technically mobile apps refer to applications on both, smart and feature, phones, the word apps now is generally used to refer to the ones used in smartphones, such as iPhone, Android, Blackberry and Windows Phone. While voice and SMS are still two of the most used features of mobile phones, apps have become a huge hit amongst smartphones users. The growing popularity of the apps amongst consumers can be judged from the exponential growth in apps downloads and the positive outlook for future. This demand in apps is also reflected on the supply side, with new mobile apps getting added to app stores at an annual rate of 63%. Though feature phones apps have also witnessed growth, it is nothing compared to their smartphone counterparts.

Supply Side Offerings
While most of us know and hear more about the consumer [demand] side of the mobile apps market, a huge supply-side ecosystem has grown (and continues to grow) to cater to the rising demands. Following are some of the key supply side offerings that have evolved in the ecosystem. Each of these - briefly introduced below - is a big market on its own.
  • Application Development Service - Application development services market is driven primarily by organizations who either lack the required skills in mobile app development or would like to outsource the development in order to focus on their core activities. It can include services ranging from plain application development to end-to-end service (including development, distribution and maintenance). Currently two-thirds of the apps are developed by such third party companies, and this ratio is expected to grow even further. This is a huge market, which is expected to grow to $100 Bn by 2015.
  • Analytics - Mobile analytics tools help developers/businesses understand the trends around their products and their users better. It helps app publishers derive insights which can enable them to make better development or marketing decisions. Mobile analytics can be further divided into sub categories such as application analytics, data analytics and campaign analytics. With the increased usage of mobile phones and apps, mobile analytics market is poised for strong growth.
  • Payments - Mobile payments is about using your mobile phones for paying for goods and services, instead of using cash, cheque or plastic. This is a big and fast growing market with total value of mobile payment transactions expected to reach $670 Bn by 2015 from $240 Bn in 2011. Currently, these transactions are dominated by digital goods, though that is expected to change with the mainstream adoption of new methods such as NFC. Financial institutions, mobile network operators and mobile payment providers have been taking advantage of this growth by either working directly with consumers or by providing the platform which can be used app developers.
  • Developer Tools - Developer tools allow faster development of applications by providing pre-built widgets or webservices. These can vary from providing tools and frameworks to providing backend webservice (such as Parse) for building mobile applications. Two of the most common types of companies that provide tools and frameworks are the ones which either were already providing developer tools (albeit for different platforms) or the ones that are already into application development service.
  • Apps & Platforms - There are many other players in the mobile development space that provide apps and platforms that other companies and developers can use to develop, launch or market their applications. Players in location-based services (such as Gowalla) and augmented reality (such as Layar) markets are some of the best examples. These types of apps and platforms vary a lot in nature and can prove to be very important for app development. 

There is no doubt that the mobile revolution is here and is only getting bigger. Smartphones, in particular, have been and will continue to benefit from this revolution. This growth has led to creation and expansion of a huge supply-side ecosystem in the mobile space. It will not be surprising if the supply side market becomes bigger than the consumer side one (if that is not already the case). After all, spade makers made the most money in the Californian gold rush.


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