The Case for Siri

Since Siri’s public debut as a key iPhone feature 18 months ago, I keep getting involved in conversations (read: heated arguments) with friends and colleagues, debating whether Siri is the 2nd coming or the reason Apple stock lost 30%. I figure it’d be more efficient to just write some of this stuff down…

siri icon

Due Disclosure:

I run Desti, an SRI International spin-out that is utilizes post-Siri technology. However, despite some catchy headlines, Desti is not “Siri for Travel”, nor do I have any vested interest in Siri’s success. What Desti is, however, is the world’s most awesome semantic search engine for travel, and that does provide me some perspective on the technology.

Oh, and by the way, I confess, I’m a Siri addict.

Siri is great. Honest.

The combination of being very busy and very forgetful, means there are at least 20 important things that go through my mind every day and get lost. Not forever – just enough to stump me a few days later.  Having an assistant at my fingertips that allows me to do some things – typically set a reminder, or send an immediate message to someone – makes a huge difference in my productivity. The typical use-case for me is driving or walking, realizing there is something I forgot, or thinking up a great new idea and knowing that I will forget all about it by the time I reach my destination. These are linear use cases, where the action only has a few steps (e.g. set a reminder, with given text, at a given time) and Siri’s advantage is simply that it allows me to manipulate my iPhone immediately, hands-free, and complete the action in seconds. I also use Siri for local search, web search and driving directions.

Voice command on steroids – is that all it is?

Frankly – yes. When Siri made its public debut as an independent company, it was integrated with many 3rd party services that were scrapped and replaced with deep integration with the iPhone platform when Apple re-launched it. Despite my deep frustration with Siri not booking hotels these days, for instance (not), I think the decision to do one thing really well – provide a hands-free interface to core smartphone functionality (we used to call it PIM, back in the days), was the right way to go. Done well, and marketed well, this makes the smartphone a much stronger tool.

But I hate Siri. It doesn’t understand Scottish and it doesn’t tell John Malkovich good jokes

As mentioned, I’ve run into a lot of Siri-bashers in the last year. Generally they break down into two groups. The people who say Siri never understands them, and the people who say Siri is stupid. I’m going to discuss the speech recognition story in a minute (SRI spin-out, right?) but regarding the latter point I have to say two things. First, most people don’t really know what the “right” use-cases for Siri are. Somewhere between questionable marketing decisions and too little built-in tutorial, I find that people’s expectations of Siri are often closer to a “talking replacement for Google, Wikipedia and the bible” than to what Siri really is. That is a shame; because the bottom line is that it is under-appreciated by many people who could really put it to good use. Apple marketing is great, but it’s better at drawing a grand vision than it is at explaining specific features (did I mention my loss on my AAPL?). While the Siri team has done great work at giving Siri a character, at the end of the day it should be a tool, not an entertainment app (my 8-year old daughter begs to differ, though).

OK, but it still doesn’t understand ME

First, let me explain what Siri is. Siri is NOT voice-recognition software. Apple licenses this capability from Nuance. Siri is a system that takes voice recognition output – “natural language”, figures out what the intent is – e.g send an email, then goes through a certain conversational workflow to collect the info needed to complete that intent. Natural language understanding is a hard problem, and weaving multiple possible intents with all the possible different flows is complex. It is hard because there is a multitude of ways for people to express the same intent, and errors in the speech recognition add complexity. Siri is the first such system to do it well and certainly the first one to do it well on such a massive scale.

So what? If it doesn’t understand what I said, it doesn’t help me.

That is absolutely true. If speech is not recognized – garbage in, garbage out. Personally I find that despite my accent Siri usually works well for me, unless I’m expressing foreign names, or there is significant ambient noise (unfortunately, we don’t all drive Teslas). There are however some design flaws that do seem to repeat themselves.

In order to improve the success rate of the automatic speech recognizer (ASR), Siri seems to communicate your address book to it. So names that appear in your address book are likely to be understood, despite the fact they may be very rare words in general. However this is often overdone, and these names start dominating the ASR output. One problem seems to be that Nuance uses the first and last names as separate words, so every so often I will get “I do not know who Norman Gordon is” because I have a Norman Winarsky and a Noam Gordon as contacts. I believe I see a similar flaw when words from one possible intent’s domain (e.g. sending an email) are recognized mistakenly when Siri already knows I’m doing something else (e.g. looking at movie listings).

This probably says something about the integration between the Nuance ASR and Apple’s Siri software. It looks like there is off-line integration – as in transferring my contacts’ names a-priori, but no real-time integration – in this case Siri telling the ASR that “Norman Gordon” is not a likely result. Such integration between the ASR and the natural language understanding software is possible, but often complex not just for technical reasons but for organizational reasons. It requires very close integration that is hard to achieve between separate companies.

So when will it get better?

It will get better. Because it has to. Speech control is here to stay – in smartphones as well as TVs, cars and most other consumer electronics. ASRs are getting better, mostly for one reason. ASRs are trained by listening to people. The biggest hurdle is how much training data they have. In the early days of ASRs, decades ago, this consisted of “listening” to news commentators – people with perfect diction and accent, in a perfect environment. In the last year, more speech sample data was collected through apps like Siri then probably in the two decades prior, and this data is (can be?) tagged with location, context and user information, and is being fed back into these systems to train them. And as this explanation was borrowed from Adam Cheyer, Siri’s co-Founder and formerly Siri’s Engineering Director at Apple – you better believe it. We are nearing an inflection point, where great speech recognition is as pervasive as internet access.

So will Siri then do everything?

That’s actually not something I believe will happen as such. Siri is a user interface platform that has been integrated with key phone features and several web services. But to assume it will be the front-end to everything is almost analogous to assuming Apple will write all of the iOS apps. That is clearly not the case.

However – Siri as a gateway to 3rd party apps, as an API that allows other apps that need the hands-free, speech-driven UI to integrate into this user interface, could be really revolutionary. Granted – app developers will have to learn a few new tricks, like managing ontologies, resolving ambiguity, and generally designing natural language user experiences. Apple will need to build methodology and instruct iOS developers, and frankly this is a tad more complex than putting UI elements on the screen. Also I have no idea whether Siri was built as a platform this way, and can dynamically manage new intents, plugging them in and out as apps are installed or removed. But when it does, it enables a world where Siri can learn to do anything – and each thing it “learns”, it learns from a company that excels at doing it, because that is that third party’s core business.

… and then, maybe, a great jammy dodger bakery chain can solve the wee problem with Scotland with a Siri-enabled app.

Oh, and by the way – you can learn more about Siri, speech, semantic stuff and AI in general at my upcoming SXSW 2013 Panel – How AI is improving User Experiences. So come on, it will be fun.

Post MWC: Android’s Tour-de-force. Is that the shape of things to come?

Over the last week I’ve had several discussions with colleagues about MWC 2011. The general gist of things was “wow, how far Android has gone”. And indeed, Android’s presence at the conference was impressive, to say the least. The usual Android suspects were there, of course – HTC, Motorola, Samsung and others. But what was even more impressive was the vast number of unknown Android manufacturers, mainly Chinese, who’ve flocked to the free platform en-masse. Known names like ZTE and Huawei were to be expected, but upstarts like Malata (who seems to make impressive Android tablets, incidentally) were there by the dozen. And of course – given Nokia’s and Apple’s absence, and RIM’s limited presence, it sometimes seemed like Android is the only game in town.

Malata Android Tablet

The Nokia / Microsoft news just fanned the fire. Essentially while it is a feather in Windows Phone’s cap (not necessarily a beautiful peacock feather, incidentally), it means that Nokia will be out of the smartphone game for a long time. And to judge by the employees’ reaction – could be long indeed.

The general conclusion I heard drawn, then is simple – Android is taking over the market, Android will define the shape of things to come, Android is where to take your mobile start-up / corporate mobile app first cause that’s where all the users will be. Right?

Sorry, it’s not that simple. Contrary to what some people think, Android to phones is not going to be Windows to PCs. At least not in the next 2-3 years. There are many reasons, but I think the most important one lies in the personal relationship between consumers and their phones. Unlike PCs (at the time), phones are a means for personal expression both explicitly (as in what you put on them / use them for) and implicitly (as in making sure your peers know what you have – just like cars). Most smartphone users associate their phone selection and habits with their identity. And with identity, a “one size fit all” strategy doesn’t work, fortunately. So as long as there are technologically credible alternatives with a well differentiated product (e.g iPhone, BlackBerry), they will draw significant audiences.

Furthermore, the wider Android spreads as a mid-market solution, the less appealing will it be to some of these people who seek to distance themselves from “the middle”. Think the Mac cult of the ’90s and early ’00s but at a wholly different level. After all – these devices are used in the open. People see what you use, so better pick the “right” one.

So clearly – the fragmentation in the smartphone space is going to continue. Each platform’s market segment will be different demographically and psycho-graphically,  and these compositions will continue evolving. I expect we’ll keep seeing Android pandering mostly to the mid-market (with of course a meaningful number of power-users and high-end customers too). iPhone will generally remain a high-end phenomenon. BlackBerry may well lose its hold on the enterprise, but acquire new audiences amongst the young and price-conscious (free messaging). And when Nokia eventually rolls out Windows Phone handsets, it is quite possible that their considerable distribution clout in European and Emerging markets will make this a meaningful platform for those audiences.

I believe a very similar phenomenon will be seen in tablets. While Android tablets are improving, the good ones are still not meaningfully cheaper than the iPad. Apple only needs some minor improvements with the anticipated iPad 2 in order to stay in the lead. Only when significantly cheaper tablets (probably running Android 3.0) will come to the market can the balance be upset. And what will we have then? A similar market structure with iPad as the premium product and Android tablets as cheaper, “good enough” devices for mid-market consumers.

Where does this leave the Android makers? With the proliferation of Chinese manufacturers with great pricing power, we will see the PC-wars re-enacted. Margins will drop to low single digits for most manufacturers, probably leading to consolidation and elimination of key brands.

So essentially – nothing earth-shattering really came out of MWC. We will see even more Androids, Symbian and MeeGo are dead (duh!) but little change to the fabric of the market as we’ve known it in 2010.

In Smartphones: Google is King but Apple is Rich

A couple of weeks ago, the inevitable was announced. According to Canalys, a leading mobile market research firm, in Q4 2010 Android has overtaken Symbian as the world’s most-pervasive smartphone platform. According to Canalys, 33.4 Million Android phones were shipped by Google licensees in the quarter – more than double the iPhones or BlackBerries.

While this has been touted with much fanfare, some seemingly contradictory information is “common knowledge” to mobile application developers. It is still much easier to get traction and especially monetize iPhone apps than Android apps. How come? With such momentum for Android, you’d expect it to be at least as successful as iPhone.

The answer, which I’ve been proclaiming for awhile now, can be summed up this way – “Android is the new Symbian”. Now I’m sure some Googlers will resent this, so maybe a different way to put it is – “Android is the new MS-DOS”.

What I mean by this are really two things. First, that Google’s strategy with Android is to reach as far and as wide as it can. That’s one of the reasons it is free to licensees, open-source etc. Google intends to eventually leverage Android by tying it to its other assets and ultimately use advertising to monetize it. This means you can build cheap Android phones and target the mid-market, not just the high-end as other smartphones have (in truth, Android hardware requirements are still relatively high, but Moore’s law is taking care of that cost). Furthermore the abundance of licensees means that a price war is evident – and indeed we now see free (subsidized) Android phones on many operators portfolios. So – Android is becoming the dominant player in the mid-market, with high-end presence too, and ultimately low-cost aspirations. This is exactly the path Symbian took in 2004 – 2008, becoming the world’s leading smartphone platform by volume – but dwindling in consumers’ eyes to a point where it drives low-margin devices, with BlackBerries (initially) and iPhones (later) commanding the high-end, high-margin sector. In 2008, a Nokia executive told me personally that Nokia learned the hard way that the top 10% of the handset market commands 50% of the margin. Think about it – if one company takes over the top 10%, it can be worth as much of all the other companies combined (who sell in aggregate 9 times as much as it does). Right? So this is the second point – a smartphone platform that is focused on mass is doomed to become a low-margin platform. Google doesn’t mind. But it’s licensees are doomed to fighting over scraps.

Now this is a tall order claim, that I couldn’t really publish before, until I ran into this analysis by Asymco’s Horace Dediu:

Which brought to mind Noam Wasserman’s “Founder’s Dilemma” metaphor about Rich vs. King. Apple’s startegy with the iOS devices, just like with the Mac before, is to aim for the top 10-30% of the market. The people who can spend, the people who care deeply about the product they are buying and using. Google’s strategy is more like carpet-bombing. If we can get to 80% of the people, we’ll surely find a way to monetize that.

So is this just an interesting business case? Or Valley gossip?.

If you’re involved in this business in any way – you might be an app developer, a marketer wanting to reach mobile device users through mobile ads or a mobile app / website etc., or a service provider who is pushed to provide a service to his customers through their phones, this is critical info. Cause it means that you are going to reach a different demographic and psychographic when you target the different platform. In the Apple case, your demographic will be skewed towards high-income, users may be more engaged with the product, and there may be more willingness to pay. On the Android platform you will eventually reach more people, but engagement and purchasing intent will be different. And your adoption ratio (compared to the total available Android market) will be different, as many of these users are much less enthusiastic about their phones. Yes – they bought a smartphone, but maybe because “everyone else is getting one” or because “it was free, so why not”. So choose your audience wisely, and plan your marketing moves with consideration for its composition.

If Steve Jobs Kept A Pet, It Would Be A Hamster

The App Store’s Hall-Of-Fame: Making It  Worse For New Developers

Just last week, I wrote a piece explaining the detrimental effect that the Top-25 charts have on new apps. To make matters worse, in a move just out of Yahoo’s books (circa 1998), Apple announced the “Hall-of-fame” – an “all-time top-50 chart” that seems to be part quantitative, part curated. What it means for new developers is that old, established, previously successful developers have yet another advantage now – one more search mechanism that steals what limited customer attention there is, and deflects it back at existing incumbents.

Is this a good move from a consumer’s perspective? On the surface, it is – now the consumer has an way to find out “what everyone else has downloaded” (the Hall-of-Fame) and “what everyone else is downloading” (the existing Top-downloads list).Everyone who gets an iPhone can quickly get up to speed with what’s best out there.

But what it really does is turn more and more of the attention in the direction of fewer and fewer applications, ultimately stifling innovation. If the Internet was managed the same way, we’d all have MySpace rather than Facebook accounts, we’d be getting directions from MapQuest, not Google Maps, and this blog would  have been a GeoCities page. To enable innovation, the “long tail‘ has to be long enough and thick enough for some good stuff to emerge – and ultimately displace the people at the top. But if it’s too hard to get noticed, even great stuff will just dry up and die before it is. So no long tail – or a very thin and shrivelled one.

So what comes next?

I have no idea. I think new iOS developers will find it even harder to penetrate that market. And incumbents will get an even bigger piece of the pie.

Where should app discovery be headed?

In my mind – probably something similar to the way Google displaced Yahoo. An effective Search mechanism, based on keywords possibly. It should study how people relate to apps, which apps are downloaded by whom, rank relationships between apps and users, possibly in an analogous way to Google PageRank, and take into account velocity and current trends, much more than it does historical downloads. A marketing mechanism based on the keywords search would make much sense too.

Any better ideas out there?

Is App Store Success Closed To New Developers?

Since DiscoveryBeat 2010 (of which I’ve written here), I had a few discussions with relatively successful app developers about the state of that marketplace. And there was a recurring a theme in some of them. It had to do with how the app store is becoming packed with consumer brands and / or apps with huge marketing budgets behind them, to the point that new entrants are unable to penetrate it.

A friend who runs a very successful finance app company put it this way – “We lucked out by going into the market early… nowadays the category is crowded by people like Bank of America, Wells Fargo, Chase… you name it. I couldn’t possibly compete in that market environment. And there’s no effective way to promote on the store…”. A quick examination of the free Finance apps category shows that 20 of the top-25 are indeed key finance brands – from Wells Fargo through PayPal to Mint.

On a similar note, a couple of weeks back I chaired the mobile track at a travel conference, where one of the speakers showed a couple of slides about the Travel category on the App Store – “then” and “now” – Top 25 Travel Apps in 2009 vs. 2010. In 2009, 10 out of the 25 were established, “non-iPhone” brands – from AAA through Expedia to Google Earth. In 2010 it’s 15 of 25. And with many of the new entrants airlines and hotel chains, where will be a year from now, when virtually all of them will have apps, which they will promote on their websites?

Why is that such an issue? According to Tapjoy’s Lee Linden (quoted in my post here), 80% of downloads on iTunes are driven by the “Top Downloads” charts. So out of an alleged 250,000 apps, you have a few hundred (~25 x number of categories) who get 80% of the downloads. A long tail, with a very fat head. And very slim pickings if you’re not in those “Top Charts”.

So key point #1: As the Top Downloads charts fill up with established brands, it becomes very hard to get and maintain such a position for a (non-branded) mobile app developer. i.e. “Get Discovered Consistently”

How is this different from the web, you might ask? In a few ways. The web is similar in that 80% of discovery happens through one interface – Google. So Google is the equivalent of the “Top Charts”. But Google manages millions or more sites. Not a few hundred. If you will, the App Store is the equivalent of Yahoo circa 1996 – and even then Yahoo had categories, sub-categories etc. etc.

Which draws attention to another point – search. If we look at the Finance and Travel categories again, here are the apps that do not include a major consumer brand, from both:

  • PageOnce Personal Finance
  • Expense Tracker
  • PageOnce Bills
  • Ace Budget Lite
  • QuickTip Tip Calculator
  • NYC Way
  • WiFi Finder
  • Poynt
  • Cheap Gas
  • Happy Hours
  • Tripit

Notice the commonality? Except for 2 cases (ok, 2.5), all of them include the actual function as part of the name, or in fact the name IS the function – e.g. “Cheap Gas”, “WiFi Finder”, “Expense Tracker”. So is “Expense Tracker” the best expense software out there? Not necessarily. But it’s the one getting the most love out of the App Store’s simple search function. Users looking for cheap gas go into the App Store, type “Cheap Gas” into the search box, and find… “Cheap Gas”. What if your gas is even cheaper? Sorry. Not so many people search for “even cheaper gas”…

key point #2: Simple keyword search is the main driver for the rest of the top-downloads. And the first thing searched is the app’s name.

…and yet again – if you Google (or Bing for that matter) “expense report” or “wifi finder” – yes, www.expensereport.com did have an initial advantage, but since then the search mechanism has evolved quite a bit. Try.

Bottom line: The design of the App Store’s “Portal” and “Search” mechanisms are pushing that marketplace towards a sort of static state – where established consumer brands dominate, and some early movers with generic product names managed to get some shelf-space too. Without significant changes to these experiences, it is going to be very hard for newcomers with mobile-only plays to get into the charts.

My next piece will probably be about some of those “alternative app discovery experiences” – AppsFire etc. Stay tuned.

What Have I Learned at DiscoveryBeat 2010?

Stop counting Downloads / Measure Engagement

Don’t charge up-front / Go for In-App Payments

The biz is on iPhone / But Droid’s on the work-plan

You need Analytics / Cause numbers’ the game, man!

I ain’t generally a lyrical guy, but they were running a poetry contest, so I took a crack (darn if I understand how I didn’t win that iPad!)

So in a nutshell – these are the main points, really:

Platforms: iPhone and Android are all that’s interesting to this crowd – and iPhone seems to be monetizing ten times better. Even though the trend for Android as a platform is great, it is not monetizing well through paid apps (and there’s no in-app payments). With this type of revenue driving most of what’s happening on the iPhone – Android developers have slim pickin’s… BlackBerry and others were all but ignored by most everyone, except for Flurry CEO Simon Khalaf who says for the last three months he’s been seeing significant developer investment in Windows Phone 7 – driven by Microsoft’s basically committing to minimum revenue numbers (i.e. directly paying them to take the risk).

Business Models and User Behavior: Most revenue still comes directly from the users, but lately more through in-app payments than pay-per-download. Advertising dollars are growing, according to Google’s AdMob, but are still secondary, especially on iPhone. Now whether it’s ads or in-app payments, to get this revenues flowing, you need engaged users, who will use (and pay) over time. People will download everything, but also discard it immediately – apps typically churn overnight… if you can’t keep your users for weeks and months, you have very little, whether it’s by way of payments or advertising. This makes analytics critical if you want to know what works and what doesn’t.

What works for promotion?  A huge percentage of downloads on iPhone result from being on the “Top X” charts – these drive 80% of downloads according to TapJoy co-founder Lee Linden (!). This means that to effectively promote, you need a concerted effort that drives your app to the chart – which then gets you a virtuous cycle of user exposure -> download -> you remain in the chart. Developers with multiple apps can then cross-sell their new apps to their existing user base via in-app ads, email etc. In fact – having multiple apps is a key driver of revenue, as when you “spike” with one you can successfully spillover to the others if you cross-market well.

Virality is great if you can get it, but getting it is far from simple. Advertising works but is costly, so it only makes sense if you can spend enough to get your app into the charts – and then have it remain there on the virtue of its quality. So you need to “buy many thousands of users” at a high CPA so that you will get into the charts – and then get many more organically. If you can’t spend enough to reach the chart, or if you immediately drop out of it due to your app not being good enough / priced low enough / presented well enough – it was all wasted money.

Flurry, who seems to be doing very well by the way, presented their AppCircle product as an alternative – lower CPA due to better targeting, which can then be economical even at a small scale. Some other points made by panelists focused on the limited merchandising possible in the App Store – sometimes even changing the app icon can bring a huge boost in downloads… Appolicious too pitched themselves as a distribution platform for developers, albeit with much less of a structured methodology around it to my mind. If you’re interested in that model, also check our AppsFire. Tapjoy (formerly OfferPal), claimed a great ability to help iPhone developers get traction, with “up to 200,000 downloads per day for the top spot” – and then to monetize via virtual goods. Some other interesting comments from their co-founder include that the app icon has a significant effect on people – sometimes by improving it you can get a 10x increase in downloads!

Android is a little different. First, the Android Market is not as driven by the “Top 25” listings as iTunes. It is also a multi-channel market with many competing App Stores (Android Market vs. Carrier app-stores vs. direct downloads / GetJar etc.) Angry Birds launch, which was done exclusively at GetJar for the first 24 hrs was of course a topic for discussion – further highlighting the issues the audience and panelists raised regarding the Android Market. When asked “which platform you’re focused on”, less than 10% of the audience responded “Android”. Most importantly – it is much harder to monetize on Android. Between the different user demographics, the missing credit card info, and the ability to “return” an app and get a refund – users are so much less likely to pay for the download. Add to that the missing in-app payments, and your market is reduced by an order of magnitude. The general consensus was that on Android it is easier to monetize via ads than via payments.

In retrospect – I have to say that this reminds me a lot of the PDA applications market circa 2001 – after the first wave, come the big aggregators (mainly Handango at the time) whose charts dictate the market . Concerted marketing efforts are focused on getting into the charts (hard) and then remaining there (not so hard if your product is both relevant and good), which you often do by engaging with your existing audience and get them to download something new on the same product SKU… Many other points of similarity too. All-in-all a very valuable conference – Kudos to the VentureBeat people for pulling this off.

Building and Marketing Your Mobile App: How To Select Your Mobile Platform

iPhone? Android? Blackberry? or is it the new Windows Mobile 7?Over the last couple of months, I’ve been urged by a couple of people to write a “Tutorial for mobile app developers”. They figure that as I’ve been doing this since ‘99 I must know something that’s of interest to some other people. Now I’m generally a little too lazy to take on a project like that, so I figured I maybe take it on in installments, kind of one chapter at a time. But I didn’t really get around to it until today, when after moderating the Mobile Track at the Eye For Travel Distribution Summit I realized the audience still has some pretty big questions and promised I’ll do my best to answer them, so here goes.

Still wondering about an App vs. a Mobile website? Wait for the next article.
Frankly, that topic requires a discussion on its own, but that’s not what I want to talk about here. So generally speaking I should say that if you want persistence – whether it’s of information on the device (e.g. such that it’s available offline, or immediately available when the app is accessed) or just of your basic brand presence and UI, or if you want a best-of-breed user experience, an application is the way to go, at least at this stage. If you’re still not sure – you’ll have to wait for a subsequent article.

Mobile Platforms – What’s Out There?
Unfortunately – much too much. Speaking strictly about Smartphone OS – In North America, there are three dominant platforms and one potential – Android, BlackBerry, iPhone (iOS) and Windows Phone 7. Elsewhere in the world, Nokia’s Symbian is highly prevalent, and MeeGo may replace it soon. If we extend our view to feature phones, we have to consider J2ME, BREW, Samsung’s bada and DoCoMo’s iAppli. I will not discuss those latter platforms at this time.

A few words about each OS (listed Alphabetically to avoid misleading prioritization):

  • Android – Google’s mobile Linux variant. Provided for free to many device manufacturers and heavily promoted by Verizon to counter the iPhone. Currently the fastest growing market. Supports a variety of device form factors and screen resolutions
  • BlackBerry OS – RIM’s proprietary operating system. Drives all BlackBerries, but not the upcoming PlayBook tablet. BlackBerry is the leading platform in the US from a market share perspective. Even though there’s one brand, there are many OS versions, device form factors and screen sizes in the market.
  • iOS (iPhone OS) – Apple’s proprietary OS. Harbinger of the App revolution and leads the App economy in many ways.  Apple always has only one device model in production (currently iPhone 4) and there is great uniformity regarding form factor and screen size.
  • Symbian – Nokia’s long-time mobile OS, once licensed (and co-owned) by many other manufacturers but since then dropped by all of them. Mostly drives mid-market phones in the non-US market nowadays, with dozens of form-factor / screen size combinations.
  • Windows Phone 7 – Microsoft’s latest attempt to reclaim the mobile market, lanched last week. Openly licensed to many manufacturers (most of them also sell Android phones). This is a brand new platform, not really backward compatible with previous Windows Mobile OS. This time, Microsoft dictates a pretty uniform form factor.

Remark: At this point in time I ignore Palm’s Web OS – which is sort of “dormant” in the market right now.

Gartner presented this chart a few month ago:
Share of 2010 Q2 smartphone sales to end users by operating system, according to Gartner.

How The Platforms Differ in The Marketplace
While there are some meaningful technical differences, the most important ones from a business perspective are the different audiences they reach – geographically, demographically and psychographically. Here are the main point for each:

Android: Android is trying to be for Smartphones what MS-DOS and later Windows are to PCs (see for instance what Fred Wilson writes about it). This results in a platform that reaches a very varied demographic / psycho-graphic, with a world-wide distribution. While this is good for Google, for you it may mean that much of the audience is composed of people who are inclined to use their Smartphones as feature-phones – not necessarily App-savvy / quick to spend on Apps. This is why many developers who develop both on iPhone and Android, for instance, claim that iPhone Apps monetize an order of magnitude better.

BlackBerry: RIM is traditionally very strong in enterprises – as a tool furnished to executives and managers as well as many other professionals. This represents an upscale demographic. However, as many of these people see the BlackBerry as a tool provided by their employer, and also because of its inferior App search / download / install capabilities compared to iPhone for instance – the propensity to download Apps and especially to buy them is lower. Lately, RIM has successfully penetrated the consumer market in many countries, reaching new audiences – not as affluent, and not necessarily focused on the “Smartphone” capablities but more on the pure communication / messaging capabilities of the platform.

iPhone: Riding on the coat-tails of the iPod and Apple’s brand, the iPhone reached the US “creative class” first. Coupling this early adopter / high-income audience with a great App download / purchase / install user experience, iPhone users download more apps then any other platform’s so far. However with the iPhone moving further down the adoption graph and wider geographically, the demographics today are more varied.

Symbian: As shown above, Symbian has the largest worldwide footprint – with North America taking a very small part in that. In actuality, much of the Symbian volume goes to mid-market phones used much less as smartphones than the other platforms, resulting in a varied, dispersed audience with (on average) a mid-market demographic. Couple that with the relatively weak experience of its Ovi Store, and you have a platform where the total use of applications is probably no bigger than the other platforms’ (with smaller volumes), dispersed worldwide (from the UK to China) and much less willing to spend on paid apps.

Windows Phone:  A brand new entrant to the game, it remains to be seen what audience it will draw and where. An informed guess would suggest it will be similar to Android’s, as we’re looking at the same set of manufacturers more or less, and the same target markets.

What’s Hard, What’s Easy
Without diving too deep into techno-speak, there are two main factors affecting how much it costs to develop and maintain an App on each platform:

  • How easy it is to develop software on the platform – which depends on the language used, the quality of the development tool suite, the richness of the “canned software” provided as libraries with the OS, and the idiosyncrasies of the platform
  • How uniform is the target phone base – for instance iPhones all have the same screen resolution, vs. Symbian devices that exist in at least 6 resolutions and 3-4 form factors (actually iPhone 4 introduced a new one but it’s still backward compatible and the same aspect ratio)

Some of my favorite developers like to use the following rule-of-thumb:

 

What costs 1 man-month on iPhone, will cost 1.5 man-months on Android, 2 on BlackBerry and 4 on Symbian

… Windows Phone is new, but as it’s Silverlight based and has a uniform screen / device layout, I guess it will be somewhere between iPhone and BlackBerry – once some developers develop the skill set.Relative ease / difficulty of development defines your fixed cost. But how hard it will be for you to penetrate the market effectively will affect more important variables – your actual success, or at least your variable cost (if you’re going to pay for marketing). This makes the market dynamics for each an even more important factor.

One area where they differ is the hurdles you need to jump in order to distribute your app. On the iPhone, an application has to be certified by Apple, which will take awhile to test it and may reject it (sometimes without even notifying you) for a number of reasons, the chief ones being objectionable content, not enough real functionality, or business conflict with Apple’s goals. On other platforms while there are submissions processes to the store, in actuality there’s very little filtering. In most cases you can also directly distribute (via a mobile web download) without ever going through the store. While this is a marked difference between the platforms – unless your application is in direct conflict with something Apple is doing, it’s not really a significant point.

More significant are the competitive environment, and how the distribution channel (mainly the App Store / World / Market) is managed.

The Competitive Environment for Apps: Circa 2010
iPhone claims 200-250,000 Apps in the market. While this shows that some people have been successful there (drawing a lot of other who haven’t), it also means that almost every idea is already represented there, often with mature products of high quality. The sheer volume of apps also means that yours will be buried down a database where serendipitous discovery of it is not very likely – kind of like a new website on the Internet. If you are a brand that people will search for anyway, or if you have an established audience you can direct to your App, you are likely to acquire users easily. But otherwise you will need to resort to any of the key digital marketing methods known on the web – advertising, PR, viral marketing etc., and your success, at least initially, will be predicated on these.

I say “initially” because the App Store has a memory, and the best way to draw downloads is by being ranked in the “Top 25” charts. This constitutes some of the most valuable exposure to end users. If you can break it into the Top 25 in a category (or better – overall), then you can remain there for awhile with limited further investment. And if your App and / or Brand are very good – then only meaningful competition can unseat you. However, do note that this is not easy. One of the reasons is that the iTunes App Store takes into account two main factors – Velocity (how fast has your app been moving in the last 24 hrs more or less) and Total Downloads. So incumbents have an advantage – unless the new App shows people are crazy for it.

Taking all this into account, one would argue that it may make sense to first try in another, more virgin territory, where the competition is not as fierce, and the incumbents are not as strongly established. With Android claiming about 60,000 apps, and BlackBerry a fraction of that, you theoretically have a better chance to compete. That is right, but you also need to consider the target audience and market dynamics. Android users tend to buy much less. This is due to a combination of factors including iTunes being more effectively hooked to a payment mechanism (all iTunes users must input their credit card details and payment is a one-click process) and the iPhone audience being more conditioned / more open to paying. So if that’s your business model, the returns may not be as good. BlackBerry users download less. However those who do, are willing to pay more. Whether or not that offsets the lower downloads, will depend on your specific case, and the overall product and marketing mix. With Symbian the distribution game is more complex – with the Ovi Store being just one channel to the market, and alternative stores (e.g. GetJar) and direct downloads being in many cases an important channel too. However in general the propensity to pay for Symbian Apps is much lower than on the other platforms, in my experience (and WorldMate has millions of pretty up-market Symbian users…).

So how to factor all of this into a decision? In my next post I will try to give some examples of how such a decision should be arrived at.

... Questions? request? post your comment below and I’ll try to address it in the next installment!
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