Business Challenges in Mobile Application Development

app_storeThe mobile ecosystem has traditionally been a closed ecosystem unlike the PC industry where the open ecosystem has been in existence for a long time. In the mobile space, till date the operators control the customer experience and the application availability. It is the operators who decide which application a customer can download or which web site can he visit. This is in sharp contrast to the PC world where the customers are free to download the content of their choice from the website of their choice. The PC industry ecosystem has seen the marginalization of internet service providers. The service providers now get the revenue only from the access charges and have no control over the customers. The same is however not true in case of wireless world. The operators are cautious in ceding control to other players in the value chain due to their experience of fixed internet. The duplication of work in absence of an open ecosystem is hurting a lot of industry players and developers in particular.

Life of a mobile application developer could be quite challenging considering the efforts he has to put in to develop a simple application. The ticket size of a mobile application is small, e.g. for Apple iPhone, most of the applications were sold at 99 cents price-point. Considering that the application revenues are split three ways – Carrier, Platform owner and Application provider, the Application developer gets very little for every application sold in the market. The only silver lining is that the volumes for mobile applications are likely to sell many times more than the PC applications. There are many issues and challenges emerging from the structure of the industry and the consumer behavior for the developer community.

Java behaves differently on different devices. The major challenge is the multiplicity of mobile devices with different capabilities, features and restrictions. Devices may have different technical capabilities such as amount of available memory, screen resolution and size of the display, network connectivity options, support for different standards and interfaces, and different operating systems and their versions. The mobile applications need to be customized to the needs of each device to be able to work on a wide spectrum of devices. On top of this there can be a need for language and operator-specific device variants. The permutations and combinations can drive any developer crazy. This also means that there is high time to market as well as much higher development costs. According to industry estimates, a developer may need to spend similar amount on portability across devices and operators as he needs to spend on developing the application in the first place.

There are multiple operating systems that are prevalent in the mobile space like Symbian, Android, iPhone OS, Windows, Linux, Blackberry OS, palm OS, Brew, etc. Each of the operating systems can have further versions for different types of devices like Symbian has S30, S40 and S60 series for its low, mid and high end devices. Absence of any dominant operating system apart from Symbian means that the developers must have their applications ported on multiple operating systems. Therefore, there is a need to hire expensive employees who are conversant with different operating platforms. Recreating an application experience on multiple operating systems is a daunting task that becomes even more complicated and costly on the backend when supporting it on different code-trains for each OS.

The other challenge is that the developers need to focus on developing applications that are easy to use on a mobile and consume less power. There is a need to test the applications on multiple devices and different carriers. The carriers are spread across the world and the developers need to physically go to the carrier locations in many cases to test their applications and partner with them.

Miniscule revenue share for developers does not help their cause. Low revenue is constraining the innovation in the mobile application space. Moreover, the size of developer community is large but they are fragmented and hence they do not have capability of investing in quality controls, testing, etc.

I have tried to list down some of the solutions to the Developer problems but most of the solutions would require structural changes to the industry and hence beyond the control of the developers. However, the developers can focus on quality of their applications and continue to lobby for open mobile ecosystem.

Develop and nurture open platforms which should be adopted by device vendors, carriers and content providers. It is important for the Global companies like Nokia, Google, Yahoo, etc. to develop open platforms that make the applications more interoperable and reduce the variety in the operating system versions. I had discussed this “Platform Dominance Business Model” in my earlier post (Wireless Industry Business Models) and I intend to devote a full article on this topic in the coming weeks.

Set up independent test agencies that have able technical resource pool across the globe that can test the mobile applications with different device vendors and carriers for a fee. Mob4hire (through an open community of testers) is one such organization but we would need many more to be able to cater to the rising demand for these services.

Device vendors would do well by restricting the number of models they introduce every year. The device vendors would benefit from the increased focus behind every device and hence the marketing money available for each device. The application vendors would benefit as it would reduce the versions they would need to create  of their applications for different devices.

Ensure better revenue share for the application developers so that they have an incentive to create better applications and have the necessary means to ensure that the applications work seamlessly across the different platforms. Apple Store and Ovi Store are a good initiatives in that direction as they have promised to standardize the platforms and promise up to 70% revenue share to the application providers.

Multi-country carriers like Vodafone, Telefonica, MTN, etc. should work towards standardization of their systems and processes so that the applications can be tested and approved centrally for each country.

Application developers should invest in consumer research and quality processes to be able to churn out more relevant applications that are more stable

The fragmented developer community needs to consolidate so that a few larger players can emerge which have a higher bargaining power with the platform owners

With the advent of 3G and 4G networks, there would be free bandwidth that would be available with the operators and at the same time they would be forced to cede to the customer demands of near PC experience on mobile phones. The carriers would be forced to part with control over customers as there are new payment mechanisms (mobile payments) and way of delivery evolving that may completely bypass the carriers. Changes in consumer preference and technology would lead to open mobile ecosystems.

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11 Comments on "Business Challenges in Mobile Application Development"

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Siddhant Garg
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Siddhant Garg
7 years 26 days ago
What is spoken in depth in this article is more from the handset point of view. I think that this is just one side of the coin. While talking about mobile applications, we should also cover the aspect from the Network side as well. The challenges faced by application developers to write network side VAS applications is equally high. This involves an indepth understanding of the network elements like – MSC, gMSC,SMSC, HLR, Signaling, TDM , SIP etc. and their complexity This results in higher resources utilization, in terms of time and money for creating such applications. The carriers are… Read more »
Amit Aggarwal
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Amit Aggarwal
7 years 26 days ago
Nice article .. Quite a good coverage ..! But i believe things are changing on few fronts 1) Applications are moving out of operator’s space to open space ..a lot of applications are developed today by independent developers or development houses against the custom apps done for operators. Though western operators are providing their ecosystems to host, buy and download apps, majority if mobile subscribers are still in the other parts of the world and there is no such thing. 2) Maturity is coming in developer community. As a result, we see robust and reliable applications coming out in less… Read more »
Jyothirmayee Pola
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Jyothirmayee Pola
6 years 10 months ago

Hi Amit,

Just for your information: I am working for a company mFormation Technologies Inc which does this bundling. We have many customers across the world from developing countries also. Check our company website http://www.mformation.com

Andy Hamer
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7 years 25 days ago

Three issues that immeditately come to mind are fast broadband speed, network capacity (some network operators have concerns over their ability to deliver to all those user that want to use the internet particularly with bandwith hungary requirements – thats why they are interested in Fermocell technology to divert traffic on to the fixed network) and customise the applications for mobile devices (they need to be modified to meet the limited screen size and restricted keyboard access). Otherwise I think its going to be a massive growth market.

Alexander Gregori
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Alexander Gregori
7 years 24 days ago

Mohit you are right that not much money is left if one has to share with too many parties. When paying for an app or content via the network provider then they, together with aggregators, take the lion’s share.

Alternative mobile payment solutions are called for, not only in terms of full on mobile banking. Have a look at http://mymobworld.com/mymobworld-launch.php for an easy but cost effective payment solution, where US$1 spent by the consumer is US$1 earned, and this is only split between platform provider and content provider.

Kind Regards
Alexander Gregori

djkoeman
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djkoeman
7 years 23 days ago
Allow me to respond to your suggested solutions: Develop and nurture open platforms: that has been tried and failed miserably. stakes for individual players (MNO’s, OEM’s, ISP’s and ASP’s are simply too high, too much at risk. Set up independent test agencies: very good idea, but who will pay them? The application developer? Device vendors would do well by restricting the number of models: sure, that’s what the OEM’s want as well, ideally 1 handset that will get them maximum market share. It just won’t happen…. Look at the car industry or any other industry for that matter… Ensure better… Read more »
Jalal Aslam
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Jalal Aslam
7 years 23 days ago
Dear Mohit sahib, Another great post by you. I think your deep industry insight is truly reflected in your posts. In my humble opinion, to know which application does well:we should also not forget the business/in office usage trend of mobiles and mobility.In my opinion a mobile/palmtops’ interfacing with other devices, such as printers,desktops or laptop should also be researched and consumer advocacy groups. Another in my opinion,big factor as the world moves towards a green and collaborative web 2.0 work/office environment is how people use mobile/laptops during office hours. I think with the multiplicity of devices certainly the developer’s… Read more »
raju sastry
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raju sastry
7 years 19 days ago
The issue here is that, there are no formidable companies who are developing applications. and also there no such compelling applications which consumers could really go and buy for themselves. most of the applications developed by developers are dependent on the following points. 1. the platform is continuously evolving. an application working in one platform will not work in the same fashion in the upgraded version. 2. If the application is an end to end solution, the developer has to tie up with the other stronger eco partner and find a solution. these issues have made application developers vulnerable and… Read more »
Jeff Brandt
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Jeff Brandt
7 years 4 days ago

As a provider of mobile application and someone who has been developing telephony since twisted pair. The market will have to settle down before real business models can be successful. Most to the app sell for what they are worth, not much. Most are hacked together with no thought at all. You are not going to see much more sophistication in the applications until there is some revenue to be made. We will just have to give it a few years until the market shakes out and kids get a new toy.
Jeff
http://www.motionphr.com
http://www.mymedbox.com

apps development
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apps development
5 years 7 months ago

For my own opinion, PC industry ecosystem from the start is really a big help because it is the main use in order to communicate clients, doing works especially online marketing. But the disadvantages is you cannot communicate directly to a certain client if he is not online in an internet. While mobile phones is very handy that is why people anywhere is bringing it. We can do two things at time and in order to work more advance like you always bring you laptop or PC, mobile application development was made.

rahul.del
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rahul.del
3 years 10 months ago

Well I don’t know if anybody knows it or not but Nokia has announced that they have partnered with Vodafone India and Airtel and Reliance to offer integrated billing solutions on the Nokia Store in India. This would let users download apps from the Nokia Store and pay for their downloads as part of their monthly mobile phone bills or have the amount deducted from the pre-paid balance.
This would surely increase the earning potential of the paid apps that developers submit.
Go To: http://www.earnwithappsnow.com/?pcode=112&src=11&act=1 and start submiting more & more apps to earn more!!

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