StartupCafe

The development of applications for mobile devices has been on the rise over the past few months in Edinburgh universities and Scotland in general. The main reason for that is the increase in the population of mobile devices: iPhone, Palm Pre, Nokia Exx & Nxx, BlackBerries, etc. At the moment, the two main platforms are Apple’s iPhone App Store and the Google’s Android Market. Other manufacturers are working on their own platforms too: BlackBerry’s App World, Nokia’s Ovi Store, or Palm’s App platform; these are either not ready or not as appealing as the first two (lack of demand for applications, smaller number of users, no interoperability etc).

Without a doubt, more and more people are using smart devices, and download third party applications. It is a great opportunity for mobile device manufacturers as they allow third party developers to create applications for their devices. For the developers, it is the opportunity to create applications and make them available to brand new growing markets. The more successful applications generate revenues which are usually shared between the two parties (30% for Apple, 70% for the developer on the iPhone App Store). It was the exact same strategy Microsoft adopted when first promoting its operating system; letting third parties develop stuff at a minimal cost for them. It increased the number of applications available, and as more and more applications were made available, more people bought the platform in order to use these applications.

The question is, how many developers will make any return on their investment (time & effort)? The first few studies seem to show that actually few applications are successful enough and generate a substancial return. Interestingly enough, these applications are not the ones we would first imagine. Users tend to use applications only a few times after they have downloaded them. Furthermore, applications such as iFart seem to be more successful than the those a little more serious. Developers around Scotland are intrigued because we all see the potential, but is it real opportunity or just dream? Looking at Apple’s revenues, it seems they made only $70m through the App Store, which is insignificant compared to the revenues from selling the iPhone itself.

We will certainly see growth in the use of applications, now that most smart devices have GPS and other advanced sensors (digital compass, accelerometers, etc). One area growing in particular right now is geo-enabled applications. To sum up, Apple and other manufacturers are using the mobile platform as an opportunity to get motivated developers to create the applications they would have never thought of, and the applications they think are not worth investing their resources in. It is clearly an opportunity for developers as simple applications can potentially generate revenues quickly. My only reservation is all this development for mobile devices hype could turn into the next gold rush, where many people will give it a try but few will actually get any return on investment.

Update: Yet another report explaining the Apple app store is overpopulated with applications nobody uses: Mashable.