Tapping into the potential of the global app market

Mobile phone apps have created a massive market opportunity and with comparatively low establishment costs, many start-ups are entering the industry, writes Brian O'Grady

Anyone setting up a new business has to overcome fundamental challenges before they can even start.

In developing a product, questions — such as is the market big enough and how will the product get into the hands of customers who will pay — need to be asked.

Imagine then a market that extends all around the world and which will be worth an estimated $17.5 billion (€13.4bn) in 2012 and still growing, which provides its own development tools — and best of all — provides a distribution model that enables you to sell, deliver and earn directly and immediately from customers.

Welcome to the mobile applications industry. Apple’s App Store has now provided 18bn downloads across 123 countries and has 500,000 apps in stock, and counting, from 85,000 different developers around the world. A study by the University of Maryland in October found 130,000 jobs in the US based on creating apps solely for Facebook’s 800 million users — generating value of $12bn to the US economy.

Google’s Android users have downloaded a further 10bn apps, according to December figures. One industry study predicts 50bn will be downloaded by 2012. Mobile apps have created a massive market opportunity that is generating a huge diversity of activities.

In November, a 12-year-old, Harry Moran, from Model Farm Road in Cork uploaded his 79c app PizzaBot to the app store, which became a best seller.

Angry Birds is the game that launched 1,000 apps and is still the success most quoted in the industry.

Generating 30m downloads for a reputed development cost of $100,000, Angry Birds has shown the potential revenues to be made in mobile app space, not least because users spend 65 minutes a day on the game, creating an advertising channel preferable and far cheaper than prime time TV. Though 70% of apps in Apple’s online store are free, the remainder average $3.64, with Apple taking 30%, while the average costs of Android apps is just a little less. Clearly there is money to be made here.

As a consequence, apps have extended beyond fun and games and into very serious applications indeed. Tactical Nav is an app now being used by the US military in Afghanistan to co-ordinate artillery strikes using GPS co-ordinates. The app was developed by a US army officer for $30,000.

Medical apps are seen as a significant growth area: Mobile MIM developed for the iPhone and iPad allows physicians to examine scans and to make diagnoses based on magnetic resonance imaging, computed tomography and other technologies.

Medscape, on the Android platform, provides 7,000 drug references, 3,500 disease clinical references, 2,500 clinical images plus procedure videos and more. There are also dozens of mobile business apps.

Training and languages are also growing fast, while the publishing industry is looking at tablets as the next logical incarnation of print media.

In Ireland, the emergence of what is effectively a new industry is generating considerable start-ups, given the comparatively low establishment costs and massive market opportunity.

Russell Quigley is a member of the team behind a pickacab.com, a mobile start-up at the Rubicon centre in Cork that has developed an app that enables users to book the nearest cab. “You’d expect it to be easy — so you identify a need and develop and app, but we’ve spent a year working with the guys and getting the application to work with the different networks and browsers and with global positioning systems — so it’s lot more difficult than I expected as a non-techie,” he says.

Pickacab has been able to develop its software in house with its partners, brothers Paul and Eddie Higgins. The business makes its money by charging taxi drivers a subscription of about €7.50 a month.

“The whole attraction with this is the scalability of the business,” says Quigley.

Having spent the past few months refining the app in Cork, the firm recently won an award from IT Cork to travel to Chicago on a trade mission, where it hopes to identify strategic partners for a release of the product in the US in 2013.

In the meantime Quigley is planning to roll out the business in Britain in 2012.

Elsewhere, Open Emotion is a games company based in Limerick and Dublin that has released games such as ZombieMart and MadBlocker on Android and iPhone. The company now develops its games across all platforms: console, PC and mobile.

Chief executive Paddy Murphy is wary of any suggestion of one platform winning dominance from the current choice.

“Games have gone from PC to console and now seem to be drifting to PC and iPad. I grew up with console games, with people constantly saying that it would all be handled by cloud computing, and I’m not so sure” he says.

“It’s a tough one as people always get very optimistic about the time-scale, whereas the current situation allows for different markets that didn’t exist before.”

As with all evolving technology markets, mobile has a platform compatibility issues which developers need to take into account. While Apple pioneered the creation of apps by external developers, Android is catching up fast, using Java open source programming.

Research into the Irish smartphone market by consultancy Puca in October, put smartphone ownership here at 54% of adults, with Apple’s iPhone accounting for 23% and Samsung and HTC, both using Android, at a combined 55%. App publishers are therefore faced with the costs of developing for two platforms.

Furious Tribe is a Dublin-based apps specialist business that finances its software development through creating apps for big enterprises.

“We’re bootstrapped, profitable and proud,” says chief executive Patrick Leddy, explaining how the firm’s success with corporate clients has meant he has not needed investors, but has still expanded the business to 22 people in under two years.

It has an impressive array of clients, including: Citibank, Davy, RTÉ, TV3, Barry’s Tea, and recently Teagasc and Irish Life. It also took three prizes from last year’s Digital Media Awards.

Leddy says his clients take a strategic perspective in developing their apps. “We’re of the opinion that technology isn’t enough and you need to build your apps on a well researched understanding of your customer.”

The company bases its expertise in the apps on its own Apptivate, a free authoring software for all mobile platforms, which Leddy maintains his mother has created apps on in fewer than 15 minutes.

“We’re trying to become the Apple of the mobile world. They have met every need. We’re going to do the same and become the ultimate tool for the business market.”