App store economics: key learnings from Swiss Mobile Basecamp

In Others by Sébastien FluryLeave a Comment

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Nobody talks about app stores fragmentation and, according to Andreas Constantinou, that’s a real pain for mobile application developers. In fact, if you develop applications on multiple mobile OS (iOS, Android, Symbian, Windows, RIM), how do you manage them all efficiently (each one has different reglementation, etc.)?

He quoted Steven Elop, CEO of Nokia, who imaged the mobile industry like that “Battle of devices has become a war of ecosystems: devices do not only compete on hardware & software, but also on developers, applications, ecommerce, advertising, search, social, etc.”.

I’ll try to describe some key learnings of the presentation in this post, if you attended the talk and can complete it, I’ll be thankful!

Appstores are a really complex business, as you have to manage 5 critical pillars:

  1. Software foundations: for instance, Google is the Master in this;
  2. Developer ecosystem: where Microsoft excels;
  3. Monetisation: think Visa;
  4. Distribution: Nokia has a wide distribution network;
  5. Retailing: Amazon is a wonderful dealer to reach single users.

To manage an appstore successfully, an organisation needs to have such various skills, because everything is extremely locked.

Networks effects are the real driving success factor of a platform and Android is currently the one benefitting more of it: for each application published on store, more Android devices are sold (in comparison with all others).

Appstores are used as a control point: Appstore is “only” a channel used to sell more devices in the long end. For instance, Apple is operating its AppStore only a bit above break-even (they do $857M of revenues from the store, but costs of operating are huge – on average, each application costs $2’300 to Apple).

And where do you think that  Google makes most of its revenue from mobile business? From competitors! That is, 2/3 of Google mobile revenues come from ads displaid on iPhone and others mobile devices.

Facebook: in-web appstore, to strenghten their relation with users and developers Developing quality applications is a costly business. For instance, for 300’000 applications, around $2 billions are paid to developers. And for an average selling price $3.5 per application, you can easily understand that reach matters more than money for developers (and as every mobile platform takes the same commission (30%) of the application selling price).

How do you get users download your application? Real life tells that social networks, free demos, blogs and forums are the best channels to market your application. Having your application on the AppStore is not enough and apparently most average technical developers don’t get the point. You can use a variety of tactics to spread your application (like lowering the price during a week-end, coupled with marketing activities), but that’s not a strategy and it doesn’t work necessarily for everyone: you have to find out what works (or could work) for you!

On the question on which mobile OS is the easiest to learn, Android is probably the one. Not because of Google efforts, but because it’s really close to Java… and almost each developer has some knowledge on Java.

Andreas talked about the developer journey methodology, from app conception to user support, which can be represented in these 6 steps:

  1. application planning
  2. develop and debug
  3. market readiness
  4. distribution and monetisation
  5. retailing and discovery
  6. in-life

The current big trends in the mobile applications sphere are:

  1. Mobile apps will soon become “business as usual”;
  2. Developer demand will allow new entrants to dilute network effects, like:

The workshop was animated by Andreas Constantinou, a great speaker who manages his own market analysis company called VisionMobile, during Swiss Mobile Base Camp in January. You can download a free cross devices report on

Related post: 10+1 myths on the mobile app economy