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Where's the Booming Apps Market Going? The History of the Auto Industry Holds Clues


The still-developing market for apps will reach $25 billion this year. So what's next?

Henry Ford and the Adaptation of the App Market

As Bryan Leeds, Co-Founder of mobile file sharing company Xsync, tells me, "Apps are currently at the stage where Henry Ford came along. Do-it-yourself app platforms are prevalent, and other platforms allow mobile websites to turn into native apps. Anyone cane make an app now, and developers are building products to make it even easier."

Because they do not require any knowledge of or skill with coding, platforms such as Kleverbeast allow anyone to build an app. This will lead to a productive explosion of lower production cost apps that will perhaps continue to oversaturate the market. However, there is a trend against this among bigger companies, which aim to downsize the number of apps offered and focus on the highest quality offerings. In this way, the major app market resembles the unification and standardization of production seen in the early car industry.

For example, Disney's (NYSE:DIS) ESPN has decommissioned 23 of its 30 apps available on the Apple App Store, choosing to focus more on upkeep and quality control for popular ones such as ScoreCenter. As Michael Bayle, Senior Vice President and General Manger of Mobile at ESPN, told the Wall Street Journal, "It's easy to make an app, but the real expense is maintaining it."

Moreover, as Nathan Ooley, President of Appmosphere Inc., told Minyanville, the life of an app is short, with average lifespan at around 14 months. Throughout that time, most apps see two to three major redesigns. Keeping up with the speed of the app markets costs all companies, big and small, a lot of money. As the big developers draw talent and investment, they continue to gain the edge in reducing costs and making more efficient, or even assembly line-like, the process of creating an app.

We will see more apps produced thanks to platforms like Kleverbeast, but perhaps the ones that will succeed -- the ones with rigorous and expensive maintenance that remain relevant amongst the constant newcomers to the app stores -- will be the most used and most popular. As of now, 2% of 250 publishers on the Apple's App Store are "newcomers," while 3% are newcomers on Google Play. Recent research has shown that even though we're downloading more apps every year -- the average smartphone user had 41 apps installed in 2012 versus 32 in 2011, according to Nielsen-- we rarely use most of the apps on our devices.

Competing Analogies

Ooley provided another historical analogy, comparing app designers now to World War I fighter pilots. When the US joined the Allies in World War I, the Army had airplanes at its disposal, but not combat pilots because, for the most part, there weren't any. The people that knew how to fly planes were largely farmers who used them for crop dusting, and so, crop dusters became fighter pilots. In a similar way, apps emerged in a burst of innovation along with Apple's iPhone and the emergence of the smartphone market, and computer coders, marketers, and advertisers began to enter the field. What is developing is a newly specialized profession of app designer, just as fighter pilots were made from crop dusters. Extrapolating further, only a few fighter pilots racked up enough kills to make them famous aces, just as only a few big developers dominate today's app market.

Of course, these historical comparison are dubious to make considering all the other variables at play, given how much our country and our world have changed since the advent of cars and fighter pilots.

Felicity Loughrey, creator of an app called Card Lust, suggests another comparison: "I don't know much about the beginnings of the auto industry, but I do think apps right now are in a state similar to [the era] before blogging became super easy with WordPress, Typepad, and Tumblr," she tells me. Before those platforms, bloggers had to know how to code html; platforms that require no coding have made sharing on the internet more accessible. Now platforms like Kleverbeast are democratizing apps, making it possible for someone with no coding expertise to author a new program.

Democracy or Monopoly?

The car industry analogy that's at the heart of this article suggests just how big the market for apps has become. Imagine how many people drove cars in 1900 and look around and see how many people drive today. The technology will flourish and spread -- this is without doubt. The question is: How will the market develop? Will it be a democracy with small, independent publishers creating niche apps? Or will major players like Google and Apple continue to consolidate power and begin producing apps along their own versions of an assembly line? Obviously we will see both of these trends continue to develop, but what will win out -- the power of the mighty tech behemoth or the scrappiness of the individual?

Disclosure: Minyanville has a business relationship with BlackBerry.

Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.
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