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« Dumbest Move in Smartphone Marketing This Year - Sony Rebrands Xperia Z4 Into Something Less | Main | Tidbits from Smartphone Wars incl some App Store Number Updates »

June 10, 2015



Recent windows 10 news ....not good! ...another disaster in the making. :-)

Ok, astroturfers please repeat after me slowly with emphasis:





No need to discuss. Nearly all of this revenue is for games. Non-games is peanuts.
This has been said countless times, over and over again, and persistently been ignored by people like you who seem to have some compulsive need to see success where none is.


Non-games is peanuts? So Whatsapp sold for $19 billion, not a game. Uber's market cap is more than $40 billion. Not a game. In 2014, 65% of Facebook's revenue (about 7 billion) came from it's mobile app. It's higher now. Not a game.

Google apps bring in billions a year ... not a game.

Dropbox, Evernote, Microsoft Office 365, Amazon, Ebay, Twitter....all huge businesses online who are deriving significant money by their extensions into mobile apps. Not games.

Netflix, Hulu, HBO Go/Now, Spotify, Rdio, Pandora...were primarily web, now primarily mobile making their money with apps. None of them are games.

Uber, Lyft, Airbnb, Instagram, Snapchat, Pinterest - billion dollar businesses born as apps...none are games.

IBM/Apple made a partnership for IBM to create 100 industry specific mobile apps for iPads and iPhones. Billions will be made...none of it through the app store purchase.

Amazon has apps...none of it's revenues appear in the app store count because the apps are free and the money is comes through Amazon's web property. Same for Netflix, HBO and any other brand that has the power to give their apps free and can get subscriptions initiated via their own websites.

The $30billion in money given to developers via app store payouts is but a drop in the bucket to the value of the exploding app economy. The smartphone is the computer and apps are how value is delivered.

Per "wertigon" Ekström

NokiaFun: Yes, the direct revenue collected from the App stores (e.g. download fees and advertising) are peanuts.

A few of those non-gaming apps, less than 1%, rake in quite a bit of dough. But for every whatsapp out there there are thousands of failures. Whatsapp and Uber are the exceptions, not the rule.

All the Apps you mention up above bring in over 90% of the non-gaming pie. It's as simple as that!


Tomi wrote that Apps have their place: "the only area where revenues are likely in apps are what it was before the iPhone ie business apps, and gaming, and social media"

Creating an app in order to reach your customers? Sure, but only after SMS and HTML. That is the essence of this article.

Interestingly, the realization that apps are mostly a dud is not limited to mobile. If you read NO ONE WANTS ...'s posted link, Microsoft retires the Skype Metro App before any kind of replacement is ready. Their Win32 client is a mess. Native OS integration and Skype for Web are the future.



Most 'profitable' apps do not make profit by themselves. They make profit by offering a service, but nothing here implies that the service wouldn't be just as profitable if it were operated through a well working HTML interface.


Another great article, thanks Tomi. There is just one point I wish would have be outlined and may it only as footnode. The article uses subscriptions, accounts and users as synonym as if they are the same. I know we not really have good ways to do otherwise but yet everytime I read that "facebook has 1.4b active users" results in personal facepalms. Its 1.4b active accounts, not users. Facebook claims this maps to 90% to users but this iis on doubt for good reasons. Its in there very own core business model to turn "active" accounts into users in everybodys mind. But fact is, this are accounts, not users. Also the metric how "active" is defined is questionable if we not only map that to users but also to reach.

My wild guess is that "accounts that login once a month" translates more in the range 2:1 to "active users" in the best case. And of this only a fraction can be "reached" (as in notice, process and response to "external input"). My point is social media is way overrated for such kind of tasks. Social media compares to children in sandboxes with very little attention for anything but there toys. This is an extra hard playing field compared with just about any other channel.


For apps a short reminder: SMS *is* an app too. Its a use-case that needs specialized code available on the device. The differences are:
1. its available on just any platform.
2. its preinstalled in just anything mobile that is connected. And thats a huge point.
3. the solutions (different implementations/apps) are compatible across all this mobiles. This is even more important.
4. there is no single vendor, entity, player who controls the whole thing. That enabkled point 1-3 and prevents competative advantage games.

WhatsApp has none of that. In its current form it will never be the common solution but only one among others which are all incompatible to each other. That makes it a temporary thing that WILL be replaced sooner or later with something else.

John A

I agree that SMS will live a long time. I am not so sure about MMS (many time its difficult to get it working with a set up process), with smartphones people use Viber, WhatsApp and so on.

And for the apps I see many companies building better websites with HTML5, that are responsive. Then it be platform independed and you not must build a specific app for every platform. You can "pin" down the website page to the start screen so it became a sort of app anyway.


What people have forgotten about apps is the cost of marketing.

You can get an app for few thousand euros and have it available for hundreds of million people. With SMS things are more complicated. You can reach only a handful of people with that kind of money.

Naturally it's not that likely for an app to reach all those people, but if your marketing budget is counted on thousands, an app may be a better choice.

Per "wertigon" Ekström

@Lullz - don't know the pricing in your country but here I can send bulk SMS for $0.01 / message.

With an App, I have to get my users to install that app, or use another service like Twitter, WhatsApp. Not to mention app maintenance and other hidden costs. So yes, $10k to develop the App... And it probably won't reach the million users I can send targeted SMS to.

For that kind of money I'd rather invest in a solid mobile-first webpage, sincce I will need one of those anyhow.



> I see many companies building better websites with HTML5, that are responsive.

Wince unlike with apps Websites have the internet as bottleneck. Many tried and failed with extending websites to apps. Thats the point about HTML5 apps. Facebook's app which is native now, FirefoxOS which is not taking off, Tizen which got native API, ChromeOS which got Android apps, etc.

> Then it be platform independed

Yeah, the java argument which ignores that the java-runtime, or in case of html5 apps the browser-runtime, is the platform. In case of browser and API's its the worst of all options? Try to run a FirefoxOS app on Tizen's app-runtime or the other way around: not portable, not even at the same platform between different versions/of the same browser. Horrible. Thats why we all use HTML5 apps not.

> You can "pin" down the website page to the start screen so it became a sort of app

More kind of bookmark what worked in Windows 98 already. harhar.



"What people have forgotten about apps is the cost of marketing.

You can get an app for few thousand euros and have it available for hundreds of million people. With SMS things are more complicated. You can reach only a handful of people with that kind of money. "

Let's first get some of the economics straight:

You can NOT get an app for a few $1000. To get a professional looking app you have to spend several man-months of development, plus all the continued maintenance an app requires. Wait: You have to make TWO apps, actually, one for iOS and one for Android.

This is a LOT more than designing an SMS campaign or a website.

But wait. It Isn't over yet. In order to reach a potential customer with an app, this customer first needs to be AWARE of the app. So, in addition to the actual marketing costs for your product you'll have added expenses to market the app that markets your product. I think everybody with a clear head sees the problem here.

The problem with SMS lies elsewhere: You have to make damn well sure that you do not alienate your customers with messages that may be considered spam and I believe this is one of the reasons why SMS isn't used as extensively as it is.

(In unrelated news, Microsoft will allow sideloading apps on Windows 10. Which clearly tells us that they no longer consider the app store an indispensable part of the process. I wonder why that is. Maybe because more and more revenue gets shifted out of it? At least that would be in line with my employer's means of generating revenue which is increasingly being transferred to in-app advertisement, i.e. no revenue for Apple and Google, even though they still have all the costs of reviewing and approving the apps.)


@John A
> You can "pin" down the website page to the start screen so it became a sort of app anyway.

That's what Microsoft originally tried to inflate app numbers for WP: Wrap the companies' mobile website in an app. That strategy managed to fool some users but ultimately was unsuccessful.

You seem to confuse HTML5 mobile websites with packaged HTML5 apps.

@The fake Tomi
I give you 1/10 for trying, but that was quite a pathetic attempt even by your standards. "Most accurate" doesn't have to mean accurate in any absolute sense, just that nobody else is consistently better.



Right. I'm starting to understand why you are not doing that great business with apps. It's not that hard to develop once for iOS and Android. It's also not that expensive if the app is made someone with some experience from designing apps for promotional purposes.

Your company obviously does apps almost from scratch. That's bad business.



You are obviously making stupid assumptions.

First, even if you do the development for both platforms simultaneously - anyone who doesn't is stupid - there's still considerable differences and you still got to test, prepare and submit both.

Second, even if you let an expert for promotion work on the app, it's still a lot of work if you want a well rounded product that represents the item/service/whatever you want to promote well.

Just one small thing: I have been tasked to work on a promotional app once in the last few years where I was lucky enough to see the campaign this was supposed to support unfold.

What do you think was necessary to make the app stick?
No, it wasn't doing any business by itself, it had to be pushed by a massive print/TV/web campaign to even get some awareness.
And ultimately I wonder whether that massive campaign would have had the same level of success WITHOUT the app - an app that never entered any popularity charts, btw.

So please tell me: What magic does an app possess that'd make it a marketing success?

Tomi T Ahonen

Ok more comments

abdul - thanks, good link. Its certainly true that more than one Billion Android users could be accessing the Play Store at least occasionally. That would be consistent with the 1.7B total Android installed base number in smartphones. But its impossible for active current Android users to be the plural of BillionS. Not two Billion or more, not even if tablet users on Android are added. There aren't enough devices in use (yet). That could be a cumulative count, though, so that more than two Billion total Android users since the start of Android have visited the Play Store from the beginning of time including those whose phones are long since abandoned or replaced.

Winter - yes very interesting talk by Mikko Hypponen. I think it also relates quite well with that Bit Data blog I wrote last month

Piot - six years, from full year numbers means six years before 2014. We do not have 2015 numbers yet. So yes, that means compared to 2008, not 2009. That year 2008 the iPhone App Store only launched and only the new iPhone 3G would even support the App Store. iPhone total app revenues were peanuts that year as it was only a partial year and the iPhone was only being launched in the more advanced areas like here in Asia (who mostly skipped the featurephone original version). What was the apps economy in 2008. You know this, Piot, you were here back then. It was ENTERPRISE apps. Yes, Nokia had its N-Gage games that had been ported to the N-Series from 2006 but that was also tiny. There was Blackberry, Palm, Windows Mobile and all that Nokia E-Series Symbian - almost all of those were enterprise/business apps, not consumer apps. In 2008, worth $7B globally.

NokiaFun - what you describe is strong signs of a tech bubble around apps. If the real economy supporting the apps industry is weak, but massive investment funds are rushing in, and nobody is able to make their returns back on those astronomical investments, that is EXACTLY what a tech bubble looks like. You might be too young to remember the tech bubble of 2002 but that is what bubbles do. Total idiot investors believing in a nonsense hyped 'economy' and rush in investing their dollars on promises that don't sit on valid business. I usually just delete comments that discuss stock market evaluations but I will let yours stand here for that warning. It is not BUSINESS if some idiot invests in a gamble. That is GAMBLING. Apps are a great gamble. Apps are not a sustainable mass market business outside of games and in games its only as bad/good as games were before apps, a typical 'hits business' like books, movies and music. One in ten is a hit, roughly speaking. The investments in apps are pure speculation and most of those will never make their investment value back - why - because of the underlying economics are rotten. Not just me saying that now, it is increasingly the consensus among the apps experts, its not a good way to make money - as a mass market service either sold to consumers or monetized via advertising or in-app virtual sales. Except gaming, one in ten, and the there is enterprise uses, sponsored apps that are not intended to make money through their own sales but are intended to provide a utility like the hotel keys etc.

chithanh - thanks, exactly my point. Nothing wrong with doing the app (as a business, brand, media, advertiser, government) after you have reached all pockets with SMS/MMS and HTML. Yes, do the app! Once your mobile business is sustainable and reaches your customers or patients or voters or students, then YES go ahead and do the app too. Its what Finnair did, its what almost all the big brands I mention here have done, Coca Cola has tons of mobile apps too. But the start is SMS (and MMS).

Rotten - good point, its a variation on the classic 'killer app' for the computer industry. A killer app didn't need to be profitable by itself (although it often was) but the killer app was the REASON why we paid a ton to buy a PC. For me, the killer app was Lotus 1-2-3, I used it in the computer lab at the university and was utterly blown away by its power, all the math I ever wanted was there in that wonderful spreadsheet, and then the thing I dreamed was, for the day I could afford to buy a PC - powerful enough to run Lotus 1-2-3 - and nothing else would be worth my while. But for many others that first PC purchase was (before the internet) driven by WordStar or WorldPerfect the word processing software, or an accounting package or some game etc.

Spawn - haha, ok, fair point, and I was trying to use numbers that are 'roughly' comparable, I know they are not the same. In mobile the big number is 'subscriptions' but that includes humans and non-humans and obviously it includes multiple SIMs and multiple phones and non-phone devices like tablets and laptops and data dongles. Unique mobile user as in humans (exclusing M2M) would be the most useful data point for mobile, but we don't have this data reliably on a global scale anywhere. Then we have the SMS number. We can count all (human) mobile phone subscriptions as prospective targets ie 'reach' but seriously, literacy does cut that reach. And we have the 'active user' count which is always subject to the measure of - active within what period? Usually three months is what is considered active user in mobile but many surveys only talk about the last month, some operators report 6 month usage period - in countries of heavy tourism it arguably is fair to also count SIM cards that are used at least once per year, because some regular travellers who come to that country at least once per year, will then tend to use that same SIM card rather actively for the two weeks or month or however long they are in that country at that time but the SIM card can be 'silent' for the next 11 months... And on SMS we get multiple accounts by same user, so I send SMS on my business account and my personal account, on different operators/carriers who think of course I am a different person, not knowing its the same person. So the 'unique' user count of SMS would be smaller than total SMS active account number.

Then we get to all the other companies, like you mentioned, Facebook. They have a considerable interest in promoting as big as possible their user numbers (except Skype where Microsoft is utterly terrified to report the real Skype user numbers knowing the big backlash they are getting from the industry). But these are yes finer points of how to measure and what to measure. For the purpose of this article, to try to wake up tech thought-leaders that SMS still is the gorilla, the rough comparisons I think are valid while you are right, they are quite imprecise. The scale is still totally in favor of SMS and I am sure you agree total HTML user number (all platforms) is bigger than Facebook (all platforms), and smaller than SMS, for example..

Spawn - excellent points and thanks. About Whatsapp, I think Whatsapp is trying to become the de-facto standard, so that if they get something like 60% of all smartphones in a couple of years, then who cares who are the small rivals. And they can go buy up a few of them and just be the biggest. To become 'big enough' that nobody can reasonably catch them, a bit like the status of Facebook today. But if the rivals were to create an 'open' messaging 'alliance' imagine Facebook Messenger, Viber, Blackberry Messenger, Snapchat, and a few others joining in, they could 'lock out' Whatsapp and their alliance would reach a larger total messaging user base than Whatsapp. That could topple them. Or else if Whatsapp stumbles and a rival is close enough in size to rapidly capture the opportunity.

John A - gosh John. Did you READ the article? I discussed MMS there, its not for us to send messages TO EACH OTHER, it is a MEDIA platform for the airline, bank, hotel, TV station, newspaper, etc to send messages TO US. And we respond to MMS with SMS. As to responsive design? Gosh that is the other idiot move. A horrid compromise of doing the HTML website once, and expecting an optimizing algorithm to 'fix' the differences between desktop and mobile phone. That is as stupid as hiring a radio news anchor to READ the news on TV without showing any pictures, videos, maps, graphics etc. Yes it can be done and boy is that STUPID. Its a PC-nerd's solution to mobile. Not learning about mobile but going PC-first and mobile-last. The least you should do is 'adaptive design' ie a mobile-first or mobile-original website that was never intended to be a PC site, that is then adapted across the different mobile screens. Then do a DIFFERENT design for the large screen (if you want, that is the MINORITY of web users already, eventually nobody bothers with that, like they don't in Japan today). And if you have a lot of mobile HTML traffic from different platforms that it makes economic sense to you, you do native design for Android, iPhone, the featurephones using HTML, Blackberry, maybe Symbian if you're in Africa etc. Responsive design is 'mobile-last' thinking. Increasingly mocked by the experts, like that Forrester study THAT I WROTE ABOUT. John did you READ the article?

Lullz - valid point but the math is fuzzy. Lets take concrete numbers. The industry reports that in the West (Europe, USA) a professional-looking app done by a digital agency costs about 20,000 Euros (equivalent HTML website of same functionality one tenth that price). But yes, lets say its Germay and you spend 20,000 Euros for your app. Certainly it has the 'potential' to reach 80 million Germans (lets assume its in the German language and alphabet with the umlauts etc) or if you want to be generous, some neighbors have German-speakers too, lets say theoretically 100 million. But that ONE app cannot reach 100 million because not all have smartphones (now we're down to 80 million again) and then you have to do the apps by platform, if we say you only do two apps, Android and iPhone you'd get say 70 million as the theoretical ceiling and much much less in reality.

What can you do in Germany with that 40,000 Euros on SMS? At 10 Euro cents retail price (without any bulk discounts) you can reach 400,000 consumers. With even modest bulk discounts you'd be at 600,000 consumers. A single SMS. Which gets 33% response rates! So why not sell your tickets or hotel rooms or get your credit card applications or schedule test drives of your new car - using SMS instead. FAR FAR FAR more powerful and immediate and FAR FAR FAR more effective. But it is true, that if you have that miracle to the order of lightning striking you not once but twice on the same day - then yes, you might get as big reach also using an app. At least even in that case its AGES slower than SMS haha. In the 3 minutes you get the response on SMS, the app-interested fan of your service hasn't even FOUND the app on the Play Store yet, far less downloaded it or installed it or logged into your service to start to play with that app.

BTW for Emerging World we can cut the cost of the app development down severely, probably by ten. And we can ALSO cut the cost of retail SMS which in markets like India is close to one penny per SMS... so the overall scale of the opportunity tends to be similar (but not everywhere, like say Brazil..)

Per - you said it perfectly especially the last part 'For that kind of money I'd rather invest in a solid mobile-first webpage, sincce I will need one of those anyhow' - brilliantly put!

(more replies coming)

Tomi Ahonen :-)

Per "wertigon" Ekström

@Chithanh: Don't feed the trolls :)

And yes, most accurate means *consistently* more accurate than others. You can find some datapoints that are off, but, nothing is perfect. The fact that some people can't comprehend that "most accurate" isn't the same as "perfectly accurate" only shows how lousily educated they are.

Tomi T Ahonen

More replies

Spawn - good comments (to John)

Rotten - thanks (to Lullz) yes good detail on the economics of app development and VERY good point about SMS that the campaign has to be smart, not be seen as intrusive or spam, as I wrote several times "dont' spy, don't spam". If you treat SMS as another spam channel you'll get horribly bad results. None of the big brands I talk about ALLOW the use of SMS or MMS as a spamming channel with their brands. All their campaigns are opt-in, permission based and deliver value to the consumer.

Also LOL interesting development on Microsoft Windows app side-loading. Yeah, all the signs are that the wheels are coming off the boat, the rats are deserting the sinking airplane, or what ever mixed metaphor we want. Fascinating detail observtion that I hadn't thought of, because I'm not that closely involved - that as app developers shift to getting their money from in-app advertising, bypassing the app stores, they still encumber the app stores with all the work needed to get the app into the stores in the first place so more burden to the app store owners, but no added revenues.

Lullz (to RottenApple) that was a bit of a cheap-shot. We know the stats from published sources, don't try to tell us that in the Industrialized World you can start from scratch and make a good compelling branded app - not a student project, but a professionally-acceptable app that someone like the BBC or American Airlines or Citibank or Nike would use, that only cost 2,000 Euros to make. And now to say you are talking about updating existing apps? That was never the discussion. We are talking of a new company/brand/entity COMING to mobile, trying to go 'mobile-first' and is told by some 'experts' to do an iPhone app (supremely silly) or any smartphone app (still dumb) or to do 'responsive design' (severely underperforming) or 'adaptive design' (better) or SMS/MMS (best). We were NEVER talking about the costs of UPDATING an app. That is yet another can of worms only getting worse with time but we'll talk about that when my big apps economy blog comes out.

Ok that brings me current to all comments through Monday morning/afternoon depending on where you are logging in from. Next supposedly Tomi Ahonen comments are likely to be the impostor again, ignore that troll, until I come back with my detailed fact-filled specific responses to you all haha.

Tomi Ahonen :-)


SMS has a massive reach, but can it really be used for promotion..?

IMO people always read their SMSes because nobody is (ab)using that channel for advertising, if companies start to expolit SMS services; SMS itself may loose its current position as a somewhat "trusted channel"

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