Market Dialogue Report

Are Mobile Apps the New Language of the Cell Phone Sector?

Mobile Industry Positioning in 2009

www.fortexgroup.com

Apps

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The New Language of Mobile

Apple has done more than just introduce a new way of computing to millions of their handset customers

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they have changed the entire communications landscape of the mobile application industry in the USmarket. Prior to the iPhone, cell phones were primarily voice and messaging devices, while mobileapplications were the domain of early adopters and IT managers. In addition, the walled garden put upby the wireless carriers defined the limited application market, and all communications for mobileapplication companies were targeted directly at working with carriers.

Apple’s

iPhone has changed all of that. No longer is the application

delivery discussion around carrier’s

walled gardens,

but instead it’s around platforms.

Consumers are increasingly discussing not mobile

services, but mobile “apps

” and they are judging

mobile platforms based on their ability to deliver arange of applications (entertainment and reference apps being the most popular). As an example, thePalm Pre went from being praised for its interface, to being criticized for not having its app developmentready at launch time.This shift has permanently changed the industry landscape and has fundamentally changed how mobile-related companies must communicate with the market.

Summary of Recommendations

The language centers on

apps

and

app stor:

“App Store” is becoming a general use trademark

store for all mobile application delivery platforms.-

Service providers are no longer the center of the app discussion:

The service providerdiscussion is centered on what phones/platforms they carry and service quality. Their ownmedia and application platforms are not central to the current market dialogue.-

The consumer media influentials are also industry influentials:

A round of calls to industryexecutives found they were reading the same tech blogs as the early adopters (e.g., engadget).However, business publications remain critical targets for industry communications.-

Watch iPhone user habits to prepare for the next hyped phase:

iPhone users are not onlysetting the benchmark, they may be indicators of what new mobile service apps will rise inpopularity in the future (e.g., video).-

Be prepared with enterprise messaging:

The discussion may split between consumer- focusedplatforms (e.g., iPhone) and business-focused platforms (e.g., Palm Pre). As a result, anenterprise-oriented market discussion may emerge.-

The general tech media is increasing the focus on mobile:

IT and tech spending projections arenow focused on mobile applications. As a result, we expect business model stories to becomeincreasingly important.

The Market Projections are Coming Out

“

Recent research from Compass Intelligence, a global consulting and market analytics company, predictsthat U.S. businesses will spend about $11.6 billion on mobile applications by 2012. The study also findsthat applications are the second fastest growing IT category of spending, in which mobile applicationspending is a high-growth component.

”

TMCNet

–

Sept 2008

Market Dialogue Report

Are Mobile Apps the New Language of the Cell Phone Sector?

Mobile Industry Positioning in 2009

www.fortexgroup.com

iPhone Users Are Setting the Benchmark for the Mobile App Industry

Recently release data on iPhone users from Nielsen shows an early indication of new trends:



37% watch video on their phone (6x more than typical sub)



98% use data features on their phone



88% use in the mobile internet (4x more than typical sub)



75% download apps (5x more than typical sub)



72% use location-based services (7x more than typical sub)The data shows that IPhone users are also a diverse group demographically, with 36% age 35-54, 29%age 25-34, 17% age 55+, 13% age 18-24 and 5% age 13-17.

What App Platform Names Are Most Popular

The following chart demonstrates the recent share of articles referring to specific app platforms. Notethat the smallest bars are articles that mentioned the specific application store name for that platform.What we are seeing is that only the iPhone App Store is catching on as a name.

News articles mentioning platformsBlog Buzz Around Top Platforms

–

iPhone Dominates

Market Dialogue Report

Are Mobile Apps the New Language of the Cell Phone Sector?

Mobile Industry Positioning in 2009

www.fortexgroup.com

Carriers, so far, are not a part of the App Store Conversation

The hottest app stores are owned and operated by platform manufacturers, not carriers.-

This may be the end of the walled garden, as new operator stores are rumored to be far moreopen.-

The carrier discussion has been, at least for the moment, relegated to that of infrastructureproviders.The following excerpt of an October 2008 News.com article, with an analyst quote from ForresterResearch, is a good indicator of current attitudes to the wireless carrier industry.

…For

rester's Golvin believes that wireless carriers see the writing on the wall, and they realize they must be more open to new applications if they hope to drive usage on their networks."It's true that the role of the carrier as the key distributor of applications is dissipating," he said. "But theupside is that these same operators still stand to make money on their data plans." The danger for wireless operators is that by ceding application distribution to handset makers or platform developers, they are essentially making themselves into dumb pipe providers. This is a wirelessoperator's worst fear and one they have already begun to see play out in the broadband market.

The Language of Mobile Apps

t’s all about the “

pp.”

The only two stores not using that term are Windows and Nokia. However,although they both have significant market share as platforms, their app stores are not generatingsignificant buzz in the US.

What do the reviewers care about? App Store Features

The following comparison chart from Gizmodo is a good example of the features media focus on whenrating app stores. Developers and marketers also need to communicate around these features as theytarget the same influencers.