Back in October of 2009, BusinessWeek reporter Douglas MacMillan argued here that although it was easy to dismiss the growing "app economy" as a fad, apps were in fact potentially powerful tools in the hands of entrepreneurs and forward-thinking business people.
The essential wisdom of MacMillan's analysis has been demonstrated over time: Nobody doubts that there is now a burgeoning app economy. More than half a dozen app stores have launched since Apple (AAPL) ushered in the era of the mobile app with its App Store. Developers of mobile apps have a large number of channels through which their programs can be brought to market.
The iPhone app model has affected the Internet in a more fundamental way, too. Its impact has been to create a world with two different Webs: We now have a "13-inch Web," that consists predominantly of sites designed for desktop and laptop screens, served by a mouse pointer, and a new kind of Web optimized for 3.5-inch screens and built around finger use. The 3.5-inch Web is rapidly expanding. According to Cambridge (England) based mobile-search-engine company Taptu, there are now about 400,000 3.5-inch, touch-optimized sites and another 200,000 or so apps.
Apple's iPhone operating system remains the most attractive option for potential developers. It's the sole platform among many—including alternatives from Google (GOOG), Microsoft (MSFT), Nokia (NOK), and Research In Motion (RIMM)—that developers cannot afford to ignore. Its appeal has been extended by the launch of the Apple iAd in-app advertising platform.
platforms for iPhone app builders
The appeal of iPhone OS goes beyond attracting those who want to remain relevant and make money from smartphone apps: The iPhone app is so ubiquitous that it is becoming a must-have item for any business, whether its interest lies in typically developing for mobile delivery or not. Digital marketing started changing with the iPhone—which dawned on me when I saw the iPint app from brewer Carling (TAP) spread like a flame among users enjoying virtual drinks in bars around the world.
Businesses are now being set up around the premise of providing platforms to iPhone app builders. Australian publisher Conversant Media, for instance, offers the popular Conversant Mobile "white-label" iPhone application development tool for bloggers who want a stylish, flexible way to display their blog content.Popular trend blogs such as Lost at E Minor and tech blogs such as Mashable and Techcrunch have long been available in iPhone app form.
While the content on offer is not always disruptive, the iPhone app model in general poses an interesting set of challenges for the industry at large. For one thing, iPhone apps differ from Web sites. Apps are richer experiences, unconstrained by limitations in such technical standards as HTML and CSS. They can be more easily monetized, too. More important, they leverage and work around mobile context and location while integrating with your phone and coping with interruptions in radio coverage via content caching and other techniques. On the flip side, they are generally much harder to update than a Web site.
Let's go back for a moment to the 13-inch Web. Over time, the quality of programming, design, and development in that more traditional medium has reached an incredibly high standard. Although it often goes unnoticed, the functionality on a site such as Facebook far outstrips that of the static Web which came before.
Now we're beginning to see this level of technological innovation and accomplishment in the 3.5-inch Web—and what's more, around a paid model. In the same way that Facebook outstrips the static Web that preceded it, the Guardian newspaper's app outperforms the Carling iPint, which merely allows users to drink a virtual pint of beer.
Superapps merit time, attention
This is where the Web and apps part: The Guardian iPhone app is part of a new wave of what I call superapps. These programs are slickly-designed and engaging, involving experiences that pass on genuinely valuable and useful content to the user. Superapps, as distinguished from earlier apps, use the distinct features of iPhone's platform to deliver real utility and value in a simple and effective way.
Superapps also distinguish themselves from regular apps in making themselves part of the way a consumer experiences the iPhone. If they are successful, they can take up a growing part of the user's mobile experience. Just as people set aside time to check their e-mails, they give time to the Guardian app.
Equally important, users have shown themselves willing to pay for quality content on their handsets. The £2.39 ($3.70) Guardian app topped the download charts on its launch day and was downloaded 70,000 times within a month. It now has well over 150,000 paid users, generating more than £250,000 ($385,000) in download revenue for the Guardian.
Having a cool, groundbreaking, and popular app is going to be increasingly important for all kinds of businesses. Indeed, with their interactivity and easy monetization, 3.5-inch apps could become even more important than 13-inch Web sites. Take for example car-sharing service Zipcar, whose iPhone app is defining its business logic by, for instance, allowing customers to unlock their Zipcars with their phones.
The question developers of super-apps are asking is how to persuade people to pay even more. How can businesses convince consumers to pay £4.99 ($7.60) for an app without considering it a "luxury" item? What does it take for an app to be worth £14.99 ($22.80)? Early indications from sales for the new Apple iPad apps suggest that its bigger screen commands a premium. I would like to think that utility and functionality play a role, as well.
customizing to the user's tastes
If we are going to monetize the 3.5-inch Web further, super-apps will need to go further. The key will lie in developing personalized solutions with machine intelligence. These apps need to build relationships with the people who use them, learning from their patterns, as well as integrating more readily with the 13-inch Web. Once a customer relationship is established, the opportunity to monetize grows.
To develop these characteristics, for instance, the Guardian app would need to analyze the stories I read and the topics I star, then suggest and order content on that basis. It would learn my personality and interests and suggest stories—and content from other sites and blogs—that might interest me.
The volume of Guardian app sales and the long term viability of the iPhone app platform provides incentives to invest and provides an infrastructure to produce this kind of personalization. A next-generation content-management system would go some way toward achieving this—just as Vignette (OTEX) StoryServer helped usher in a new era of news publishing on the 13-inch Web.
It's clear that the rise of smartphones and smartphone apps is leading to a new kind of Web. The next stage—getting users to pay still more—will depend on delivering the next level of personalization, more engaging content, and services we've never seen before.