Online Retailers and the Mobile App Profit Dilemma

by Holly Shoemaker

A recent report from research2guidance reported that in 2012 most online stores made less than five percent of their revenue from a mobile app. 

Numbers at a Glance

The company surveyed more than 600 mobile-commerce companies and found the following:

• Almost 19 percent of e-commerce companies made more than 25 percent of revenue via mobile channels. 
• One third reported that they expected to generate more than a quarter of their revenue from mobile within the next five years. In addition, 15 percent of those companies reported that they planned to generate half their revenue from mobile apps.
• For online retailers to profit from mobile apps, they need to achieve downloaded numbers of more than two million. At this time, many online stores only achieve a few thousand downloads. 

Mobile Ad Spending to Grow

eMarketer predicts that U.S. mobile ad spending will reach $7.19 billion in 2013 and more than $20 billion in 2016. Despite those numbers, mobile only entails a small percentage of total ad spending. It comes in at just 2.4 percent. If the number increases as expected to $20 billion in 2016 that will bring the percentage to 11 percent – that means it will rank higher than radio, but will not overtake print.

Hope for Online Retailers?

The future for online retailers and revenue from mobile apps depends on the goods or services sold. Stores that sell virtual goods perform well. Companies that sell game apps and upgrades or virtual goods inside them also have a better chance at becoming part of the exclusive five percent.

Yearly iTunes Connect Shutdown: No New Apps, Updates and More Changes

by Holly Shoemaker

Black Friday has passed, and like last year, I successfully avoided anything to do with that, and now cyber Monday approaches. While consumers have gotten their holiday apps and emails to find the best deals, everyone should keep in mind that development starts slowing down.

iTunes Connect Shutdown

This time of year means more than just finding the best deals. For developers, it is the time they slow down on releases.

Shutting down has a lot to do with Apple as developers lose access to iTunes Connect for a week in December. This year, developers will lose access from from Friday, December 21, 2012 to Friday, December 28, 2012. As a reminder, the shutdown means no new apps or updates will be made available. Even if an app was scheduled to appear, Apple warns it will not show up.

Apple added another component this year. Releases and pricing changes scheduled to appear will also find themselves delayed. During the shut down, in-app purchases will also be unavailable. The company opened a day earlier last year so the timeframe could slightly change.

Consumer Reports Electronics Issue: Barnes & Noble Praise; Updated Tablet Rankings

by Holly Shoemaker

Consumer Reports Annual Electronics Issue has hit the stands. In this part one of two blogs, I have recapped the latest trends and rankings for tablets, with smartphones to follow. These are new ratings when compared to Consumer Reports Buying Guide 2012.

Tablet Buying Guidelines

• Trends – The non-profit agency says to keep looking for better screen displays at lower prices. Besides mentioning the obvious choices of the Kindle Fire HD and Google Nexus, Barnes & Noble’s nine-inch Nook HD+ at $270 is described as "an even bigger game changer." The model features a retina display close to Apple's and a lower price point. At the time of print, the model was unavailable for testing.
• Still an App Gap – Apple retains its praise for its selection, quality and innovation of apps over Android. Magazines also get a special mention as many have their own apps for iPad. Barnes & Noble's appears to want to gain ground on Apple. The Nook HD+ has a more-square design, specifically designed to make magazine reading easier. Barnes & Noble also features the 100 best-selling magazines.
• Laptop-Like Tablets – While the Microsoft Surface debuted too late for testing, many tablets feature more laptop features, like Samsung’s Series 5 and Series 7 Slate models.

Tablet Rankings

In the seven-inch range, Samsung still reigns. The Galaxy Tab 7.7 ranks first with a score of 82, followed by the Pantech Element at 77. In the WiFi only category, the Toshiba Excite comes in first with a score of 80, followed by Google Nexus at 77 and the Amazon Kindle Fire HD 16 GB at 77.

With little surprise, Apple remains at the top in the nine- to 12-inch category. In the WiFi plus category, the iPad scores an 85, followed by the iPad 2 at 81. Samsung Galaxy Note 10.1 ranks second with 83, after the iPad with the same score. Asus has many models that also make the list.

Facebook Gains Mobile App Ground and Improves Developer Experience

by Holly Shoemaker

Facebook has started to generate revenue from mobile apps. Yesterday, Facebook announced that its mobile revenue grew faster than expected in Q2 2012. 

Facebook reported the following:  

• The company now generates 14 percent of its revenue from mobile ads. 

• Mobile usage rose 61 percent from year to year with a monthly average of 604 million users. The company also reported an average revenue per user rate of $1.29, up one percent from last quarter earnings, but still down 9 cents from Q4 2011.

• Revenue from payments increased 13 percent to $176 million.

• In total, advertising revenue increased 36 percent to $1.09 billion, up from 28 percent in Q2.

News for Developers

Facebook also announced an SDK update for Android last week, designed to make it easier for developers to distribute and promote apps. The company noted the release is the largest overhaul to date for SDK Android. Developers may download the release in the Android Dev Center.

Earlier in the month, Facebook announced that it has almost completed its redesigned Google Android app. It is supposedly in the testing phase, but the company has not released specifics or a date.

Concluding Thoughts

Facebook has made steps to improve mobile apps for its users and developers, and Google left an opening. While Google remains the number one provider of smartphone software, it missed targets because if its increased reliance on lower-priced ads. 

While all of these details bring some good news to Facebook, the company will have to maintain a balance with its mobile ad stream without damaging a user's experience with too many ads, and it will need to drive the price of its mobile ads up. At the same time, the company needs to retain its focus on improving the Android experience.

Plea to Microsoft: Do Not Become More Like Apple

by Holly Shoemaker

Microsoft will continue to make news with its upcoming release of Windows 8. Last week, Steve Ballmer, the company’s CEO, said he could envision the company becoming more like Apple. In his annual letter to shareholders, Ballmer said the company may decide to build its own smartphones to complement the upcoming Surface, the company’s first tablet. 

Concluding Thoughts

While I understand the need to compete, consumers do not need another Apple, and Microsoft will need to analyze how its current partnership with Nokia affects it standing in the smartphone market. It will also need to see how successful Windows 8 is with consumers.

I still maintain Microsoft will better position itself by filling the market gap left by Research In Motion (RIM). Despite its intentions to relate more to individual consumers, gaining strength on the business-to-business (B2B) side has strategic merit as we see with Nokia and its map app platform. With Windows 8 approaching, Microsoft should think more about the opportunity to promote its new Windows Phone and the Surface, but on a B2B scale.

Apple Issues Insincere Map App Apology: No Plans to Offer Google Map Equivalent

by Holly Shoemaker

Today, Apple’s CEO Tim Cook issued a letter of apology to customers to address the disappointment and performance of its iOS 6 Apple Maps.

Overview of Apology

Apple apologized for the frustration its map app has caused, and said the company continues to work on improving functionality.

In the letter, Time Cook had no choice but to mention the option of using other apps until Apple addresses all issues – the letter even mentions Google Maps and Nokia Maps. However, Microsoft’s Bing gains the first mention, showing that Apple will not go out of its way to admit its mistake of splitting with Google Maps too soon.

Concluding Thoughts

Apple’s apology does not come across sincere. Instead of sticking to an apology, the company took the time to praise itself on the number of people using iOS 6, and stated that customers have searched for half a billion locations.

The letter should do little to diminish people’s frustrations with the application and its latest operating system. The numbers also do not equate to success when people retrieve incorrect information from the app. Furthermore, a letter of apology does not change the outcome that Apple has no equivalent product to Google Maps, which used to come as the default map app on previous iPhones. On Tuesday, Google confirmed that it had not submitted a map app to the Apple’s Apple Store. 

Apple prematurely severed its ties with Google here – being Apple only gets the company so far. It will have to quickly deliver an updated and tested application to its loyal customers. If not, Android and other products like Nokia Maps will continue to gain more customers.