A Billion-Dollar Turning Point for Mobile Apps

The path for Internet start-ups used to be quite clear: establish a presence on the Web first, then come up with a version of your service for mobile devices.


Now, at a time when the mobile start-up Instagram can command $1 billion in a sale to Facebook, some start-ups are asking: Who needs the Web?


Smartphones are everywhere now, allowing apps like Foursquare and Path to be self-contained social worlds, existing almost entirely on mobile devices. It is a major change from just a few years ago, underscoring how the momentum in the tech world is shifting to mobile from computers.


In that context, the Instagram deal looks like something of a turning point, as even the Web giant Facebook tries to get a better grasp on a market that requires a rethinking of old rules.


“For decades, the center of computing has been the desktop, and software was modeled after the experience of using a typewriter,” said Georg Petschnigg, a former Microsoft employee who is one of the creators of Paper, a new sketchbook app for the iPad. “But technology is now more intimate and pervasive than that. We have it with us all the time, and we have to reimagine innovative new interfaces and experiences around that.”


Venture capitalists are eager to get in on the mobile trend. According to the research firm CB Insights, mobile apps and companies attracted 10 percent of the total investment dollars from American venture capital firms in last year’s fourth quarter, and 12 percent of deals were mobile-related, up from 7 or 8 percent in previous quarters.


Ben Lerer, manager of the venture capital firm Lerer Ventures, said he preferred to back companies that were building services for mobile first and the Web second, because “businesses that are thinking that way are planning for the future.”


Mr. Lerer was one of the early investors in OMGPop, a New York company that was close to shutting down until it had an overnight hit in Draw Something, a twist on Pictionary for the iPhone. Last month, OMGPop was snapped up for $200 million by the game company Zynga, which has been trying to reduce its dependence on Facebook-based games like FarmVille.


Another hit game, Angry Birds from the Finnish company Rovio, started out on the iPhone before migrating to computers and video game consoles — an unusual trajectory in the game world.


Cellphones are also prompting a shift in how people want to share things online, creating a market for apps that make instant sharing easy, said S. Shyam Sundar, a director of the Media Effects Research Lab at Pennsylvania State University.


In other words, many people want to post a photograph of themselves right from a sun-drenched beach in Bali, rather than waiting until they are back home to upload all 50 pictures onto Facebook.


“People are living in the moment and they want to share in the moment,” Professor Sundar said. “Mobile gives you that immediacy and convenience.”


Instagram, a social network focusing on just that kind of instant photo sharing, does have a Web site — but it is essentially there just to encourage people to download the company’s apps. It is one of several social networks that have established themselves entirely on mobile. Another is Foursquare, which lets users share their location with a select few friends and has attracted nearly 15 million members.


“Mobile-first is the direction that many social networks are headed,” said Holger Luedorf, the company’s head of business development. If done right, he said, such services start to feel “baked into” the phone itself.


Dave Morin, who was at Facebook early on and left to create Path, a social network for mobile phones, said he realized that the world was headed for a mobile-centric future in 2009, when the influential analyst Mary Meeker published a report saying that more people would soon connect to the Internet on mobile devices than on personal computers.


Path does not release user numbers, but its app appears to have traction, particularly among people who have become disenchanted with Facebook. “Because you take your smartphone with you everywhere, you can quickly and easily take a photo or video, map your location or jot down a note or a thought,” Mr. Morin said.


Companies that start with a Web site then try to shrink it into an app face a tough challenge. Screen space on mobile devices is at a premium. And to avoid turning off users, designers and developers have to cut back on clutter and streamline their services, avoiding slow load times and stuttering interruptions.


Start-ups that put their resources into mobile from the beginning can skip some of the hassles. “You’re freed from worrying about so many of the things that you have to think about when it comes to Web development,” said Oliver Cameron, one of the founders of Everyme, an app introduced Tuesday that analyzes a user’s contacts and generates miniature social networks around people it thinks belong together.


Then there is the relative ease in finding an audience. Web sites and software packages have trouble standing out in the crowd. But apps have a simple distribution mechanism in app stores, which can immediately bring an app to a customer’s attention. “In February we had close to 900,000 downloads,” said Andreas Schobel, chief executive of Catch, a start-up in San Francisco that makes a note-taking app. “How would we do that on the Web?”


Mobile apps tailored to work for specific devices like the iPhone also run faster than Web sites, Mr. Schobel noted. “When you’re on the phone you need the experience to be instantaneous,” he said. “You just can’t do that yet on the Web.”


http://www.nytimes.com/2012/04/11/technology/instagram-deal-is-billion-dollar-move-toward-cellphone-from-pc.html?_r=1&nl=todaysheadlines&emc=edit_th_20120411

The best apps of 2011

For Christmas, millions of people found a smart phone under their tree: More than 6.8 million Android and Apple devices were activated, according to the market research firm Flurry.

The first thing those users did after powering up their phones: download applications. On Christmas Day alone, 242 million apps were downloaded, Flurry said.

With hundreds of thousands of apps available, it can be hard to know where to start. Here's a guide to some that we can't live without, with a bias toward those built in the Bay Area.

Instagram: San Francisco's Instagram gained more than 15 million users in its first year by making it fun, fast and easy to share photos with friends and family. But it also solved a real problem: helping novice photographers take decent shots with their smart-phone cameras. The variety of attractive photo filters Instagram offers lets users improve their images with the tap of a finger. An update to the iOS app this year made the filters 200 times faster than before; an Android version is on its way. (iOS; free.)

Dropbox: Moving files around used to be hard. In 2007, Dropbox made it easy. You install the program anywhere - your phone, your MacBook, your PC at work - and it creates a magic folder backed up to the cloud. Add anything to the folder, and the changes show up almost instantly everywhere else. It's a simple idea, but no one had gotten it right before Dropbox. The San Francisco startup had a monster year in 2011, shooting to upward of 50 million users while creating redesigned versions of its Android app and mobile website. (Most platforms; free, with paid options for more storage.)

Chase: The fact that this app lets you deposit a check by taking a picture of it with your Android phone, iPhone or iPad gave us all one less reason to occupy the banking system. Chase is the biggest bank to enable deposits via phone, but at least eight other banks and credit unions have apps with that feature, including Charles Schwab, USAA and State Farm Bank. (Android and iOS; free.)

Evernote: The tagline of this Mountain View startup makes a big promise: "Remember Everything." But Evernote will help you get closer to that goal than any other app. Create notes of any kind - to-do lists, recipes, photos of where you parked your car - or store important files for safekeeping. A single search will retrieve any of them almost instantly, sparing your brain from having to remember the details. This year, Evernote released updates to its excellent apps for every major desktop and mobile platform, and also made its first acquisition: Skitch, another great app that helps people annotate images. (Most platforms; free, with paid options for extra features.)

CardMunch: One of those magical apps that makes you feel like you're living in the future. Take a picture of a business card, upload it to the cloud, and in seconds it is transcribed and the contact information is sent to your phone. LinkedIn bought the company in January and made the service free (iOS; free.)

Tweetbot: The poorly received redesign of Twitter's iPhone app this year sent thousands of tweeters into the loving embrace of Tweetbot, which bills itself as a Twitter app "with personality." Indeed, the app is filled with lovely touches: configurable buttons, useful new gestures, and pixel-perfect design. (iOS; $2.99.)

Uber: Anyone who has hurled himself into traffic trying to score a cab in this taxi-bereft town will appreciate the five-star service offered by San Francisco's Uber, which sends elegant town cars to your location quickly and at the tap of a finger. Your credit card is already on file with Uber, so there's no need to carry cash. The top-notch service comes at a high price - a recent journey of barely a mile cost me $18 - but for a growing number of urbanites, Uber is a worthwhile indulgence. (iOS and Android; free.)

Pocket MUNI: If you struggle with navigating San Francisco's bus system (ahem) you'll do well to pick up one of the apps designed to make it a bit easier. I use Pocket MUNI, which improves on the free NextMuni.com site by allowing you to locate nearby stops, see a stop's location relative to yours, and create lists of favorite stops for easy lookup. An update this year made Pocket MUNI a native iPad app as well, and it looks great on the bigger screen. (iOS; 99 cents.)

Rdio: Spotify gets all the love these days, but it's worth mentioning the high quality of the mobile apps from its Silicon Valley competitor, Rdio. Slick apps for most major platforms let paid users sync as much music as their phones and tablets can hold for offline listening, while doing a better job than anyone at delivering recommendations for what else to check out. Rdio was also the first streaming music service to develop a native iPad app, and it's gorgeous. (iOS, Android and Windows Phone 7; $9.99 a month.)

Onavo: Anyone struggling to stay under a bandwidth cap will want to check out Onavo, a free service that reduces the amount of data used by your favorite apps. Onavo compresses the data used by your apps without noticeably slowing them down. It will save you megabytes by the hundreds. (iOS and Android; free.)

Lookout Mobile Security: The rise of malware directed at mobile phones has created the need for software like Lookout's, which does a great job identifying threats posed by innocuous-looking apps in the Android market that turn out to be malicious. It also backs up your data to the cloud and helps you find any device that goes missing. A paid version alerts you when you accidentally visit a malicious website and lets you remotely erase your phone if it goes missing. The company also introduced a free iOS version this year with features of its own. (Android and iOS; free and paid.)

E-mail Casey Newton at cnewton@sfchronicle.com.

This article appeared on page D - 1 of the San Francisco Chronicle

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/30/BU1M1MHNR7.DTL#ixzz1lCncAA62

Dialing for Dollars with Phone Apps

Branded mobile applications can spark interest in new product categories.

Title: The Effectiveness of Branded Mobile Phone Apps (Subscription or fee required.)

Authors: Steven Bellman (Murdoch University), Robert F. Potter (Indiana University), Shiree Treleaven-Hassard (Murdoch University), Jennifer A. Robinson (Murdoch University), and Duane Varan (Murdoch University)

Publisher: Journal of Interactive Marketing, vol. 25, no. 4

Date Published: November 2011

Some types of branded mobile applications (“apps”) are more successful than others at improving consumer perceptions — and some can even generate interest in brands whose products weren’t relevant to consumers before. That was the conclusion of this study on the impact of commercial apps, apparently the first of its kind.

Smartphones such as Apple’s iPhone and Google’s Android have revolutionized mobile communication, in large part because apps have effectively turned the devices into handheld computers. In the case of the iPhone, owners can choose from more than 100,000 apps to perform a range of functions, from checking e-mail and consulting maps to banking and shopping online.

But apps represent more than just convenience for users — they are a significant new opportunity for marketers. When consumers choose to download branded apps, which prominently display a brand’s identity through its name, logo, or icon, they are welcoming apps as “useful” parts of their day-to-day life. The intimate nature of interacting with an app requires a new understanding of advertising communication, however, because, as the authors write, “the consumer talks to the brand, not the other way around.”

Previous research has looked at the impact of text messaging and Web advertising on consumers, but the rapid evolution of smartphones and their potential for advertisers has not been widely explored. This study shows how big that potential is. “Apps seem like an ideal medium for educating people about new categories [of products], or categories they have yet to try,” the authors write, “so it would be useful to experiment with ways of encouraging customers to use apps for this purpose.” Indeed, they say, “The implication is that smartphone application development could be a better use of funds currently deployed on mobile-ready Web sites and other forms of advertising and promotion.”

More than 200 people took part in the study in the United States and Australia; they ranged in age from 18 to 74, and men and women were equally represented. Twenty-eight percent owned an iPhone, 68 percent owned a different type of cell phone, and 4 percent had no mobile phone. All participants received the same amount of training on using apps, to eliminate any novelty effect, and the experiment was conducted on an iPod Touch.

Eight branded apps were tested. Because previous research has found that a product’s relevance to the consumer has a large impact on a brand’s appeal, half of the brands in the study were in product categories that have been identified as predominantly targeting men, and half were selected to appeal more to women. The four female-targeted brands were Gap, Kraft, Lancôme, and Target; the four male-targeted brands were Best Buy, BMW, Gillette, and Weber. The apps were generally unfamiliar to the participants.

The authors hypothesized that the application’s type — either primarily functional and utilitarian or aimed at enjoyment and entertainment — would help determine how participants used it and were affected by it. Four of the apps in the study were labeled “informational.” For example, the Target app allowed shoppers to see the week’s deals and clearance items and to access product reviews by scanning bar codes. The other four were labeled “experiential” — BMW’s app, for instance, took the form of a game in which users could configure a 3-D model of the Z4 Roadster and take it for a virtual test drive.

To establish whether participants’ attitudes toward brands changed after they used the apps, the researchers had participants complete an online survey about 10 days before the experiment. In addition to answering questions about whether they owned and used a smartphone, they indicated how often they used products in the categories represented by the eight brands. Finally, the researchers used an 11-point scale to measure the participants’ attitudes and purchase intentions toward two brands from each of the eight product categories: the test brand and a competitor’s brand.

During the experiment, participants were presented with the eight apps in random order. They were required to interact with each app, and could do so for however long they wished. Over the course of the session, the researchers tracked the participants’ heart rate. Previous research has shown that when people are focused externally (playing a board game, for instance), their heart rate slows down, whereas when they are engaged in something that requires greater introspection (trying to answer a question, say, or research an issue), the rate increases. The researchers wanted to see if this difference would extend to app usage.

After interacting with the last of the eight apps, the participants took a survey that again measured their degree of engagement with the eight product categories, along with their attitude and purchase intentions toward the brands.

The researchers found that in general, the phone apps made the participants think more favorably not only of the brands, but also of the overall product categories they represented. This latter finding was unexpected and potentially significant: Apps could be a way for advertisers to reach across traditional product or gender boundaries to appeal to new types of customers.

There was, however, only a small shift in participants’ intentions to actually buy a product from the app’s sponsor. And not all branded apps had the same effectiveness. Applications that employed an informational style were more successful at making people want to buy one of the brand’s products. Additionally, although there was no significant difference in the heart rates of women when they used the two types of apps, male participants had much faster heart rates when using informational apps, suggesting they were “focusing attention internally and thereby encouraging the generation of personal connections with the brand.”

The authors conclude that because many people view their smartphones as extensions of themselves, packed with personal data and customized interfaces, branded apps could be a highly effective form of advertising. Smartphones follow consumers wherever they go, and branded apps are all the more powerful because it is the consumer who decides whether to download and opt in. Unlike pushy messages, such as those delivered by television commercials or text messages, apps can subtly improve consumers’ attitudes in a format they want to see and use.

But the researchers caution that the study also implies that successful apps are hard to produce. “Designing an informational app that consumers find useful in their daily lives is a lot more difficult than building an experiential app by creating or adapting an interactive game,” they write. It requires a larger budget of time and money. But if the end result is something useful to consumers, apps could be “one of the most powerful forms of advertising yet developed.”

Bottom Line:
Using branded mobile phone applications increases consumers’ positive attitudes toward a brand. In addition, apps can boost people’s impressions of an entire product category, making them a potentially useful way of reaching new consumers. Informational apps, which help people solve problems or gather data, are the most likely to improve a brand’s bond with consumers because of the personal connection that is forged.

Wireless technology improvements set the stage for killer mobile apps

By Niel Nickolaisen, Contributor

SearchCIO.com

In my quiet moments, which occur about once every five years, I think about what my dream job would be. Ideally, it would be something interesting, yet not too stressful. Time and time again, I decide my dream job would be IT futurist. I imagine myself gathering data, talking to technology experts and CIOs, and then pontificating about the next big trends in IT.

Like a highly paid hitter in baseball, I figure that if I got one in three predictions right, I would be an IT futurist superstar. The problem is, I am not sure I am prescient enough to determine the next technology wave.

More about mobile apps, killer and otherwise

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I do feel confident, however, that I can predict accurately that mobile applications are something we CIOs should adopt, and adopt quickly. My rationale is based on four realities:

• The wireless infrastructure is becoming ubiquitous. We can get a wireless signal almost anywhere.
• Wireless bandwidth continues to improve.
• Devices are getting smaller and smarter (a few years ago, I was pondering replacing laptops with netbooks, but now I am bypassing netbooks entirely and going straight to tablets).
• We are accustomed to being connected to our work nearly continuously -- how many of us don't check our email way before and after normal working hours?

If I am right, and mobile applications are the next technology wave, how can we ensure we are successful in adopting and exploiting them?

I have decided to focus on making my mobile applications "killer apps." What does this mean? It means I will identify a high-priority problem or opportunity that can be solved with an application that can be accessed anytime, anywhere on a mobile device. I admit I am a little behind the curve on some of the broad-based mobile killer apps: Someone already has figured out how todeliver email on a smartphone; and someone else already has linked GPS data to smartphones so I can get driving directions to the latest and greatest barbecue hole in the wall.

With those problems solved, I want to focus on niche killer apps -- applications that will more directly help my enterprise reach its goals. To identify these apps, I have to do what I have always done to ensure the technology I deploy adds value. Put another way, I have to make sure I understand the needs of my internal and external customers, brainstorm about how technology can meet those needs better, and experiment to validate our assumptions about the value of the technology

But I need to do all this with one critical twist: I need to reorient my thinking to the mobile world. To do this, I need to travel to the far reaches of my organization and my customer base. Who is mobile? What work do these people do? What applications -- ones they can access anytime, anywhere -- would help them be more successful?

I do feel confident, however, that I can predict accurately that mobile applications are something we CIOs should adopt, and adopt quickly.

For example, our salespeople spend most of their day on the road, meeting with customers and taking notes on deals they are negotiating. When they get back to the home office, they sort through the notes they have taken and document the deal points. Eventually these documented deal points end up in proposals and pricing schedules. This process is prone to errors, however. Deal points the salesperson documents today might be different from existing proposals and pricing schedules. These differences can result in incorrect invoices and customer frustration. If I want to use technology to improve this process, it needs to be a mobile technology -- one that can go on the road with my salespeople.

So, we set about designing a killer mobile app our salespeople could use to create and update proposals and pricing schedules immediately. To increase adoption rates, we focused on usability and simplicity. We did early prototypes and pilots to get early feedback. We worked closely with our salesforce influencers to get them on board -- and on board early. The result was a great deployment for an anytime, anywhere mobile solution to a nagging problem.

Not all problems are best solved with mobile applications. Nevertheless, it seems that network and device technologies have converged in a way that can cement IT workers' role as innovators -- especially if I dream about how my mobile apps can be killers.

Niel Nickolaisen is CIO and vice president of strategic planning at Headwaters Inc. in South Jordan, Utah. Write to him at nnick@headwaters.com oreditor@searchcio.com.