Distilling market noise into market sense

VisionMobile is the leading research company in the app economy. Our Developer Economics research program tracks developer experiences across platforms, revenues, apps, tools, APIs, segments and regions, via the largest, most global developer surveys.

Discovery kills distribution: why the web needs a new leader

[Apple and Google have locked app discovery and distribution within their app stores. VisionMobile’s Andreas Constantinou explains how Facebook is using the web to disintermediate Apple/Google and why the web needs a new leader].

Discovery kills distribution: The real impact of the web highway

The platform duopoly.

In just the space of 3 years, the mobile platforms landscape has changed from an election race to an oligarchy. The network effects at the heart of the Apple and Google business models have created formidable barriers to entry. The growth in device shipments and apps created seems to continue a relentless climb, showing no signs of developer fatigue or consumer segment saturation as we discussed in our earlier analysis. Beyond the duopolists, competitors have been forced to jump from their burning platform into a chasm of uncertainty or to give up altogether.

The Apple/Google duopolists are now behaving like proper autocrats. Apple is imposing a 30% revenue share on all in-app payments. Google is keeping Android Market and Motorola patents for the exclusive use of its protégées.

The duopolists have been able to run such a tight game by locking together four elements: development, discovery, distribution and monetisation. That is, you can only discover, download and pay for Apple apps through the App Store. Plus development happens through Apple tools only. Google is equally fanatic in controlling development, discovery, distribution and monetization, but is more open to affiliates – for example it allows Sony Ercisson and Vodafone to run their own branded shop within Android Market.

The results are measurable: Over 65% of Apple and Android users discover games via the native app stores, according to Nielsen.

Web discovery kills distribution

With the duopolists amassing so much control, other industry players are getting uneasy. Amazon is creating its own Android tablets and own app store to circumvent Google’s control points. Facebook has shed its Flash dependency and is working on project Spartan – believed to be an app store for HTML-based mobile web apps – that will circumvent Apple/Google app stores.

In the mobile world app distribution is locked to the platform, discovery is still a bottleneck due to the abundance of 100,000s of apps. Developers and media brands alike will pay dearly whoever can put their app in front of the right consumers and help that app get “discovered”. This is similar to the desktop web where distribution is commodity, but discovery is still king due to information abundance, which is what makes search such a lucrative business.

This is where HTML and the web come in.

HTML implies browser-based access and browsers are the only de-facto installed runtime on all handsets that is not bound to any proprietary ecosystem.

HTML and browsers are being used to bypass distribution silos. As such, HTML is being promoted not as a platform (i.e. apps), and neither as a technology (i.e. APIs), as we argued in our recent report. HTML is being promoted as a business model.

Facebook is using the web (in effect browsers) to help users discover Facebook apps and bypass proprietary Apple/Google distribution silos. Facebook is using discovery to kill distribution.

Web purists will argue that the mobile web will always stay open. But we know this is not the case on the web where social networks (Facebook, Twitter) have built silo’d mega-portals which you can only access through carefully crafted, ajar APIs.

Similarly, you can expect Facebook to restrict access to mobile Facebook apps to its own mobile web store, much like how Google can eventually restrict Chrome apps to be only discoverable through the Chrome web store.

And here you have it: web will be the new closed. Back to square one.

Mobile Web as the 4th horse

There are many benefactors or sponsors of the mobile web evolution and they are all in to help drive their core business. Facebook is expected to use the mobile web as a development, discovery and distribution platform. Qualcomm is pushing the web to drive browser sophistication and help sell more smartphone chipsets with web-acceleration smarts. Apple is pushing the web because it wants to have the most “street-compliant” web browser. Google is pushing the boundaries of browser sophistication so that it can auction smarter, more lucrative ad formats across more eyeballs. Facebook and Google are leading web discovery through social discovery and mobile search. Telcos are hoping their own web-based app stores will compel users to switch away from Apple/Google lock-in to a buy-once-use-everywhere app concept.

But there’s a paradox here: the mobile web platform has many benefactors but no leader. Everyone is promoting the mobile web as a business model, i.e. to indirectly drive their core business or benefit from free PR and implicit goodwill. But no one is promoting the web as a platform. The mobile web as a platform has no leader, no general to command the troops, no governor to set the rules. It’s a headless platform.

This presents an unprecedented opportunity for the next challenger to the Apple/Google duopoly. We believe that the next player with complete metal-to-cloud consumer ambitions will use the mobile web as a platform.

Such a choice has many benefits; firstly a mobile web platform offers access to “virgin” segments of web developers who are new to mobile; secondly it comes will many billions of dollars of free developer marketing – already in our measurements of developer mindshare (see our Developer Economics 2011 report), the mobile web comes 3rd after Android, iOS platforms; thirdly, it is a kind of patent haven since web technologies are in the public domain and not behind corporate legal walls; and finally because it allows content providers and brands to get on board from day one with their legacy web content.

The mobile web is waiting for a new leader.

– Andreas
You should follow me on Twitter

  • Ren

    This is unclear, the mobile web is waiting for a leader *to do what*? open another app store (like you said FB is already working on that…)?

    • Andreas Constantinou

      What we are missing is a single definition of what "web apps" are (in terms of capabilities, APIs, UI) and a large addressable market (10s of millions of devices) that implement this definition. A "leader" in this sense is platform vendor that brings this web platform on millions of devices/tablets and creates a developer ecosystem (of which app store is a component) and a consumer proposition (consumer brand & marketing).

  • http://twitter.com/cranstone @cranstone

    The large addressable market is already there. What's missing is a browser that can access native API's without violating customers privacy. You talk about it by saying metal-to-cloud access. Google, Apple, Firefox, Microsoft could all implement it tomorrow. Add a browser plugin with the ability to call native functions. And the second they do the viruses etc take over.

    The alternative approach is to design a solution that integrates into the existing browser infrastructure that allows native API access, but leaves the customer in control of who gets to see that data.

    Pretty straightforward really – a secure device side database (wallet) that stores the data and then an API that hooks it into the browser and shares the data with any web server (on an approved whitelist).

  • http://voxer.com Igal Perelman

    I fully agree. Some companies might find webOS useful…

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