Carriers, App Store and Mobile Web: Six Factors for App Distribution Success

Written by Jason Grigsby on

Last January, I wrote about how the iPhone App Store was the surprise story of 2008.

Web 2.0 -- Web-based Apps, Services & Mashups, Software as Service, Cloud Computing vs. iPhone App Store: Native Apps, Few APIs between apps, No Recurring Revenue, Local Storage
Flickr photo by Civisi:

The point of my previous post was how the iPhone App Store ran contrary to the prevailing technology trends. Particularly when it comes to the trends that we’ve come to think of when we talk about Web 2.0.

However, from the perspective of the mobile industry, the iPhone App Store presents several breakthroughs and its success isn’t surprising at all.

The iPhone App Store vs. Carrier Application Distribution

Apple’s ability to convince AT&T to let it release an App Store that Apple controlled was ground breaking. Because of this, the App Store was a significant leap ahead of what had come before. Here are some of the factors that we looked at when comparing the development platforms:

How difficult is it to become a developer for a platform? What hoops do you have to jump through to get permission?
Entry Cost
Assuming you can get permission, how much do you have to pay to develop and sell software for a given platform?
Revenue Split
How much of the revenue will you have to share?
Can you publish anything you like? How much outside influence is there on the software or content you want to publish?
How difficult is it to release your software? What are the review cycles?
How easy it for you to sell your software? Is there a good system for purchasing small amounts?

We took those six characteristics and compared the iPhone App Store to what previous model where the carriers where the gatekeepers to a mobile application’s success:

Carriers App Store
Openness Closed, Seek permission Open to anyone who signs agreement
Entry Cost Thousands of dollars $99
Revenue Split 60/40 to 50/50 70/30
Restrictions Many Few
Releases Difficult, Not Timely 1 to 2 weeks
Micropayments Inconsistent, Troublesome iTunes account for every phone

Looking at those six factors in the table above, it is clear why the iPhone App Store represented such a significant departure from what was previously available to developers.

The barriers to entry are lower which means that more developers are participating in and there is more buzz surrounding the App Store than any of the previous models could have hoped to achieve.

How does this compare to the mobile web?

How does the mobile web compare to the App Store? Let’s take a look at those six factors again:

App Store Mobile Web
Openness Open to anyone who signs agreement Completely Open
Entry Cost $99 None
Revenue Split 70/30 100%
Restrictions Few None
Releases 1 to 2 weeks Instantaneous
Micropayments iTunes account for every phone No perfect solution

For five of the six factors, the mobile web has an advantage over the App Store.

This Doesn’t Mean the Mobile Web is No-brainer

Despite the fact that five out of the six factors favor the mobile web does not necessarily mean that the mobile web is the best strategy at this moment in time.

The lack of a consistent payment model for the mobile web is no small thing. It is a huge hindrance for mobile web adoption.

At the same time, lots of test are going on right now to try to allow people to purchase real world goods like groceries using their mobile phones. If in the future you will be able to buy a bottle of water using your phone, I’m certain you’ll be able to buy digital goods like mobile web applications and services through your phone.

In addition, there are good reasons why people choose to build native applications that have nothing to do with the application distribution mechanism. We’ll cover those factors in a later post.

So what does this mean? Future Possibilities

When I look at these six factors, it says to me that in the long run, the mobile web will be a distribution mechanism equal to or better than App Stores because of the freedom and control that it gives developers.

In the short run, the lack of consistent micropayments for the mobile web makes it very challenging compared to the iPhone App Store.

If there was one thing that would make the mobile web more successful, it would be a consistent mechanism for paying for mobile web services and applications.

Jason Grigsby

Jason Grigsby is one of the co-founders of Cloud Four, Mobile Portland and Responsive Field Day. He is the author of Progressive Web Apps from A Book Apart. Follow him at @grigs.

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@nate You’re right. I refer to that as findability.

I have five factors that I’ll be blogging about soon for why someone chooses native development versus mobile web, etc. Findability is one of those five factors.

Findability probably belongs on this list as well. I can’t remember why I left it off of this list.

@jer I’m talking specifically about getting applications approved for on deck distribution via carriers and getting those applications approved by the carriers for distribution.

In particular a historical perspective on what it took to get approval rather than the current lay of the land.

The funny thing is that these criticisms of the carrier model are so commonly cited and taken for granted, I don’t have anything handy with specific numbers. I’ll take a look around.

@jer I don’t think you can discount the importance of the iPhone design and form factor. If the distribution model was great, but the end user experience sucked, it wouldn’t matter.

RE: Micropayments. It isn’t simply important that micropayments exist. It is that the payment system is built-in, readily accessible, and universal. No one has an iPhone that can’t buy software using their iTunes account.

Great analysis!

One factor I’m thinking about is what might be called “discoverability” (I’m sure there’s a better word): how users find, evaluate, and install apps.

It seems like the one-stop shopping model of the Apple App Store has an advantage in this area that the mobile web should also address to become a highly competitive alternative.

Are you comparing iPhone apps to those of non-smartphones? I’m pretty sure that it doesn’t cost thousands of dollars, and that you don’t have to share revenue with anyone when developing a Blackberry app, a PalmOS app, a Windows CE app, a Windows Mobile app, etc. Which platform is it that your numbers and assessments refer to?

I’d be interested to see the same breakdown applied to all the other mobile app distribution platforms that predate iPhone. I’m not questioning the appeal or success of App Store, I’m just not sure that success can be pinned on the factors you’ve listed. If it were any of those factors, the platforms that predated iPhone ought also to have seen the same success, as they all have them. (Assume, of course that you define ‘micropayments’ as ‘paying with a credit card’)

Consistent micropayment method(s) also will need to be carrier-agnostic. This is the true hurdle to mobile apps hat are not tied to a single carrier payment agreement, such as between Apple and AT&T. When I was working with a large Seattle-area maker of operating system and office software – there was much gnashing of teeth at the problems encountered with coming to an agreement on pricing for services that would be acceptable to each an all of the carriers – not to mention the wildcard of prepaid phone contracts. This single-carrier arrangement with AT&T, much disliked by users, may be one of the single strongest points of advantage to Apple’s success with the app store.

Excellent article, thanks.

I’d add one item to the App Store vs. Mobile Web comparison: compatibility (or maybe consistency); and it’s in favour of the App Store model.

A mobile web app must run on a lot of browsers on a lot of phones, and it will be very hard to get a consistent experience across all those platforms. That’s a problem that any closed app system doesn’t have and will work to its advantage – for the moment.

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