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Many app stores will fail in next 12 months: GetJar exec

Many app stores will fail in next 12 months: GetJa

eBuddy

How does GetJar view the mobile applications market? After all, it is the world's largest independent mobile app store not affiliated with a wireless carrier, manufacturer or parent company.

The company claims more than 470 million downloads so far -- averaging 1 million downloads daily -- from 200-plus countries and more than 10 million unique users each month, according to Patrick Mork, vice president of marketing at GetJar, London. Aside from competition, Mr. Mork seems concerned about the state of the apps market.

"Our concern is that certain players are getting into the app business more to ride the hype but without a clear understanding of what the consumer wants, what resources are needed internally to manage or grow this business, or without a solid understanding of what developers need to be successful in this space," Mr. Mork said.

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In this Q&A, Mr. Mork explains how he sees the app market evolving, GetJar's points of differentiation with competition and the future of this fast-growing sector of the mobile market.

What's the latest news with GetJar?
GetJar was recently selected by Sony Ericsson as its partner to help the Swedish handset manufacturer offer free mobile applications in its PlayNow Arena app store.

Patrick Mork

Patrick Mork is vice president of marketing at GetJar

The company has developed Sony Ericsson's submission and content induction system and will feature a link to the "free apps" section on the PlayNow Arena portal that will give [Sony Ericsson] customers access to GetJar's extensive library of over 45,000 apps.

More recently, the company announced it will also provide Virgin Mobile France with its full selection of applications on the Virgin Mobile portal.

This follows on the back of similar deals with 3UK, Vodafone Ireland, BlackBerry and number of other carriers over the past 12 months.

Where does the development piece fit into GetJar's strategy?
Developers are an integral part of GetJar's strategy to offer the best and highest quality content to its 10 million-plus unique users.

The company's origins lie in development and GetJar was originally conceived as a platform for developers to beta-test their content and exchange development knowledge and tips.

In that respect, GetJar offers content owners and developers access to free statistics regarding global handset use by consumers -- to support developers in choosing which handsets to prioritize and develop for -- as well as beta-testing services through an active community of 35,000 beta testers, and analytics on product performance.

What is GetJar's market strategy in this environment?
GetJar's aim can best be summarized by the company's slogan "appsolutely everything."

GetJar's app store differentiates itself from others in several keys ways, namely:

• 100 percent cross-platform: Our strategy is and has always been to offer the widest array of content to consumers regardless of where they are, what handset they use or what platform they are on.

GetJar believes that consumers fundamentally are handset agnostic. Our research confirms that of the many criteria consumers use in buying a new handset, content is now the thirdd most important factor behind brand and user interface.

Fundamentally, handsets are becoming the fourth screen and just as many consumers are more concerned about the content that comes through their set-top boxes than the brand of their television set, so too consumers will care more and more about what type of content they have access to and less about the platform or device it's served on.

• Open: Consumer's want the broadest range of content. They want it quickly and they want it easily.

GetJar does 1 million downloads a day because of its large catalog and because consumers discover and access content easily there.

Better yet, since the content is free the download process is vastly simplified and less clicks -- due to the lack of billing -- means consumers get their content more quickly.

But also importantly, GetJar allows its community of users to decide what is good and what's not on GetJar.

GetJar only restricts content if it's graphically sexual, excessively violent, offensive or pirated. Apart from that we don't care how many maps applications are on GetJar and who made them.

Our community decides which app is best and apps perform based on their quality and visibility on the network. Consumers will be the judges, not content bureaucrats.

• Free: A big differentiating factor is our focus on free content.

GetJar believes that in a nascent and developing industry, consumers need to try things in a risk-free environment before they'll actually commit their hard-earned dollars to paying for them.

Just like Coca-Cola gives away thousands of free cans of Coke Zero before asking consumers to pay for them, so too should content owners pave the way for consumers to fully appreciate mobile content before asking them for money.

Furthermore, GetJar again has benefitted from extensive market research giving us a clear understanding of how and why consumers use mobile content and this research clearly shows again that the majority of content out there cannot be charged for.

If consumers are used to consuming news, downloading casual games, getting a new browser or chatting via Skype for free on the Web, why should these services all of sudden be paid simply because somebody has to amortize the cost of their mobile network?

However, that said, we do believe somebody has to make money on content. We simply see different business models being able to achieve this aim while keeping content free for consumers.

• Long live the dumb phone. Although GetJar recognizes the potential behind smartphones and acknowledges that smartphone users download more content then feature phone users, we have built a thriving business across both types of devices.

Just because something isn't sexy doesn't mean it doesn't make money. Making bread is one of the most profitable businesses in the world, as is insurance. Might not be sexy, but who cares?

The same rule applies for "dumb phones" and this is a fact that's supported by GetJar's statistics.

Today among our top download markets are countries like India and Indonesia. These markets do five to 10 times the downloads of many established European markets.

How many downloads are coming from smartphones in these markets? Less than 30 percent. How many come from the iPhone? I who?

Where does GetJar stand in terms of the mobile applications market?
Today, GetJar is the largest, independent -- i.e., not affiliated to a carrier, OEM or parent company -- app store in the world.

With over 470 million downloads done to date, the company is doing on average 1 million downloads every single day.

These downloads come from over 200 countries and over 10 million unique users every month.

Our top markets include the United States, India, Indonesia, the United Kingdom and Egypt.

Over 75 percent of GetJar's consumers are male, with 70 percent being under the age of 24.

GetJar's consumers are a loyal and satisfied bunch. Seventy-eight percent of consumers have downloaded content in the past six months and 61 percent find the breadth of content either "amazing" or "excellent" -- top two boxes out of five.

Who are GetJar's main competitors?
GetJar classes competitors in two separate categories: direct and indirect competitors.

Direct competitors are companies in the same space looking to distribute content directly to consumers. These include companies like Zedge, Mobile9 and Mobango as pure direct-to-consumer players, as well as handset vendors with app store plays like the Apple App Store, BlackBerry App World, Android Marketplace, Nokia's Ovi and the Palm App Market.

It's important to note a few things though when discussing competitors. The first three [Zedge, Mobile9 and Mobango] primarily deal with user-generated content as opposed to apps and therefore aren't really direct competitors.

The handset vendors are vertical as opposed to horizontal market. They have very defined markets which are defined by their handsets, platforms or both. This also limits the potential audience they can reach.

In addition, being focused on one platform severely limits a developer's ability to cross-market his or her app to consumers on another platform.

GetJar sees competition, in general, as a good thing for several reasons.

First, competition, independent of their ability to successfully build a solid business out of apps, helps grow the market.

Companies like Nokia and BlackBerry have established brands and significant resources that help build consumer awareness around apps and with the press.

Whether they are successful long term remains to be seen, but in the meantime, we all benefit by greater exposure to consumers and more channels to market for developers.

Second, GetJar can work successfully with some of these partners as opposed to competing with them.

If one looks at the recent Sony Ericsson deal, for example, this deal allows Sony Ericsson to clearly continue to focus on two important businesses -- their handsets and the delivery of premium content -- while leveraging GetJar's core strength of delivering the long-tail of content to consumers.

This creates a win-win model for the OEM which works well to increase distribution for GetJar as well.

The same can be said of GetJar's partnership with carriers such as 3UK, Vodafone Ireland and Virgin Mobile France. And this is only the beginning.

What is the state of the mobile apps market?
The mobile apps market is currently booming.

Apple recently announced 1 billion downloads done and is doing 4 million downloads every single day.
GetJar crossed 450 million downloads and is well on track to hit a half-billion downloads in the next four weeks.

Nokia, Palm, Sony Ericsson, LG, BlackBerry, Qualcomm and Google have all either launched stores or are planning initiatives.

Carriers such as Vodafone have announced plans like the Joint Innovation Lab with the purpose to help standardize API's and assist developers get their apps to market. The market is in a state of growth and constant flux.

On the developer side, developers have a greater choice than ever before in terms of platforms to develop on and channels to take their apps to market.

They are also becoming increasingly sophisticated in developing business models to profit from their applications.

Today, developers can either sell content through various premium channels -- Apple, Research In Motion, Ovi, Handango, Handmark -- or they can push free content through GetJar, Apple and various other channels.

Free models include anything from fremium apps -- apps that upsell from a demo or limited version to paid version -- and ad-funded, or ads that run in the app that subsidize its cost. Another model is third-party-funded -- Google paying Opera mini for search traffic coming from Opera's mobile browser.

New business models such as in application billing or micro-transactions are also due to start on Apple's App Store which will allow for event-based billing -- charging 25 cents, for example, for the next 10 levels of a game.

Consumers also have more choice than ever before.

Not only do consumers have access to more content on more handsets, but they also have more channels to download from.

Consumers can find content for virtually any handset from the most powerful smartphone to the simplest dumb phone. They can find both on GetJar.

They can download apps that provide news, entertainment, location-based services such as maps and restaurant guides, games and chat/email clients.

Today if you look at the top downloads both on GetJar and Apple -- the two largest app stores -- you see similar consumption patterns:

• Consumers 18-34 are avid users of technology and generally more male then female
• High repeat purchase: anywhere from four to six apps downloaded per month
• A preference for email/chat applications, games and music.

What's the future of mobile applications?
Although apps are very hot now, there is potentially a lot of hype in the market and many companies are getting into a business that they know little or nothing about.

GetJar is willing to make two predictions on the future of this emerging industry.

On the app store front, we predict a large number of app stores will fail over the [next] 12 months or so.
Being successful in the apps business requires scale, a global reach, a deep product catalog, a solid value proposition for developers and content owners, and a seamless way to deliver content to consumers quickly and cheaply.

Our concern is that certain players are getting into the app business more to ride the hype but without a clear understanding of what the consumer wants, what resources are needed internally to manage or grow this business, or without a solid understanding of what developers need to be successful in this space.

When the time comes for boards to weigh what exactly these app stores have brought to their companies, many of them will find they didn't deliver incremental handset sales, didn't generate greater subscriber growth or didn't reach the amount of premium sales needed to justify the ROI.

We believe two kinds of players will be successful: those vertical players such as Apple who are truly committed to the application space and have deep consumer relationships, great catalogs and a seamless way to get their content into the hands of consumers in a closed or semi-closed ecosystem or those who partner with specialists who can provide them the content, knowledge and channel to market to their consumers in an open and cross-platform manner.

Those in the middle will fail since they will have neither the large repeat business from a small but loyal consumer base nor the large, volume play from a broad consumer base with a slightly lower consumption pattern.

From a marketing and content point of view, we predict an explosion of content and massive surge in the use of mobile applications by established brands and brand agencies.

The logic here is simple. As mobile adds yet another medium to reach consumers, it will become ever more difficult for brands to reach consumers through all the noise.

Brands and agencies will have no choice to try to increase the frequency of certain mediums as opposed to the reach on a greater number of consumers.

Mobile applications are not necessarily a mass-market play, especially in the short term.

However, it's about consumer engagement and building an interactive relationship with consumers, as opposed to a passive relationship.

Marketers will face two choices. They can run CPM-based or CPC-based ads to consumers on their handsets and compete with more and more other players trying to reach the same users, or they can build "deep" consumer relationships through apps.

To illustrate the difference, think of 1,000 consumers who see a banner for a Coke ad on their mobile phone versus 50 consumers who download a Coke app and play with it for two to three weeks.

The app lives on the consumers' handset until he or she deletes it. The consumer is 100 percent engaged with the brand while using the app and can even share this app with their friends.

The banner ad, though, is a fleeting memory 10 seconds after seeing it.

Which is better? Smart marketers -- and the ones with the budget -- will do both in an effort to brand-build to mobile-complement their above-the-line campaigns while also deepening relationships with loyal consumers through the use of apps.

Editor in Chief Mickey Alam Khan covers advertising agencies, associations, research and mobile marketing issues, as well as column submissions. Reach him at mickey@napean.com.

 
Related content: Content, Patrick Mork, GetJar, Apple, BlackBerry, Sony Ericsson, iPhone, mobile applications, mobile apps, mobile marketing, mobile

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