WorldMate CEO blog – Nadav Gur

Sunday, March 15, 2009

Leaders and followers - How everyone is following Apple's lead (?!)

In the last few months I've posted some rants about the shortcomings of the iPhone AppStore before, for instance under " . In doing so I've echoed the voices of many other industry players, including AppCubby, Mobile Tech Today and others. The general assumption in the market was that when introducing the AppStore Apple wanted to start simple, learn, and upgrade later. An example for such an upgrade are the "Top Paid" and "Top Free" apps tables.

One thing I certainly did not expect is for everyone else in the industry who's been distributing mobile apps for years, to look at Apple's success and draw the conclusion that they need to "go primitive" in order to be competitive. Take a look at handango.com for instance. They've been leading the mobile applications downloads market for years, and were the Mecca for early-adopter smartphone users. Over the early years, they've evolved their merchandising practices. For instance, they moved from a "Top 50 downloads" table counting downloads, to a "Best sellers" counting unit sales (just like iTunes), to a best sellers list measuring revenue generated by the different titles. And it worked for years.

Over the last few years, growth has stagnated. While I can't put my finger on it exactly, I can say from our ISV partner point-of-view that it seemed like things have slowed to a crawl there. Initiatives like subscription billing, free applications distribution with pay-per-download for the vendor and others took years to evolve for "IT reasons". And the iPhone has dealt them a blow - with their core audience switching in droves from Windows Mobile and Palm to iPhone, and then being forced to download only through the App Store.

How does a company respond to such market conditions? Well, in their case it looks like they've picked a very naive version of "if you can't beat them, join them". A couple of weeks ago they've switched their best-seller lists to be run by "most units sold" instead of "most revenue generated". So long $99 eOffice and WorldMate Live. Long live $0.99 iFart and iMaid.

Does this strategy make sense? Let's assume for one second that this strategy is indeed the right one for the App Store (I don't). Is it the right one for Handango? Are Apple and Hadango equivalent? let's see. Apple's targeting un-informed consumers who purchased the "coolest phone out there" and is trying to educate them to download apps. It has an existing billing relationship with them which means that it can easily power a good user experience for a $0.99 impulse purchase. The focus is on mass market "goods" and the strategy is focused on the lowest-common-denominator.

Handango's audience reached it after looking for a place to buy applications for their (non-iPhone) smartphones. They put their credit card numbers in to pay for their purchase. They have opted for BlackBerries and Windows Mobile devices. Are they the same psychographic as iPhone users? Will the lowest-common-denominator strategy work?

An even bigger concern are Apple's competitors. The AppStore's success is of course something they cannot ignore, and the rush to issue such stores of their own is justified. Advertising their phones as application platforms is something they should have started doing years ago (and believe me, I personally pitched such campaigns to them in the past). But are you going to be a leader or a follower?

One of the giants of this industry, a company who's been defining the mobile market for years, has recently announced its upcoming application store. This company has built various application and content distribution channels over the last 10 years, and has tested every model you can think of - from internet to on-device to retail-point-of-sale. They've done everything except one thing, which is to actually promote application use to consumers when they advertise their phones. Wait, isn't that a key part of Apple's marketing strategy?

Anyway, they're working with their developer community on the upcoming launch of their app store, and initially stated they will support a variety of business models - subscriptions as well as one-times, trial apps, freemium, etc. Then all of a sudden they have a change of heart. You see, now they are looking for a "consistent download experience", so why don't everyone go back to pay-before-you-download applications with a one-time fee and that's all?

What's going on here? Have Q4 reports been so bad that a market leader has lost any ability to think on its own and is blindly following Apple's example? What will they do in a few months when Apple will come out with subscriptions, trial apps etc.? Implement them then because then it is good practice in line with consumer expectations? Incidentally - is this also the strategy with your phones? To just clone Apple? Is this scalable? sustainable?

The latest news is on RIM's BlackBerry App World. The good news: an App Store for BlackBerry, with some more flexibility allowed to developers, and RIM heavily promoting application use. The bad news: RIM seems to be assuming BlackBerry users and iPhone users are the same demographic / psychographic. Therefore it taks the $0.99 - $9.99 pricing levels that are the norm on the iPhone App Store (but not imposed by Apple) and setting them as the established price level for the BlackBerry App World. Is your tool worth $50? Is your service going to generate / serve the business user $500 in value? Sorry, this is a Dollar Store.

Where is it all going? How much innovation is going to go down the drain because of this infatuation with $0.99 gimmicks? Frankly I don't know. I can only take solace in comments posted by our users on my previous posts about this, for instance:

"If people are willing to pay $.99 for crappy apps and odd sounds, imagine what they would pay for an app that is actually useful and works wonderfully like WorldMate Live."

Let me know what YOU think...

4 comments:

Adam said...

What I think is that you are very bitter; there are great free apps, for example take reQall that come through the app store, but paid apps remain, and the good ones keep going (ifitness, rtm.com to name a few).
Like the majority of your blog reader comments have said, I would buy WM for iphone. Still paying the same as I paid for my BB, as it WAS the best app on my BB. Now I have the iphone, as it is in my opinion the better platform I now look forward to getting a product similar to WM from someone else, it will now only be a matter of time...
It seems like you don't like to listen, just rant about the face you don't think you can charge as much...

Tim said...

Downloading iPhone apps is very easy, and I would pay $20 for WML. but I won't pay $99.

the golden question is, can you get ten customers who will pay $9.99 more easily than one customer who would pay $99?

vpshosting said...

I don't usually reply to posts but I will in this case. WoW

dedicatedhosting55 said...

Hi, many thanks for your article. I will try to follow. Hope will got more exposure. Thanks for sharing the useful material.I think I will benefit from your content.