winners and losers in mobile apps.

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Bouncing around London, Ottawa, K/W and Toronto you get an appreciation of the diversity of tech in Ontario. I believe its different and much broader then most other provinces o states.

Over a little more than a year I’ve seen at least nine(!) business pitches for companies focused on being developers (in some cases- chop shops) for mobile apps in every local tech scene – they’re everywhere. Two major concerns for these companies I see is the mass of talent coming online (colleges started offering these dev. courses 2/3 years ago – college grads will work for cheap) and a proliferation of apps – App fatigue? maybe. But I don’t think this market is dead – and I don’t feel like talking about the technical future of apps (HTML5 will change the the world, etc.).

Lets just say it – many of these companies are going to fail.

They are on the curve of early adoption and the reason they can survive is the lack of skills sets for companies to meet these needs in house. One early problem I had is that I can name three companies working with Rogers on apps, which should make one pause – two cited them as close partners. This business is a strange parallel to the web development scene of the late 90’s when the webshops were being started in every city with design contracts for each local site. 

The cycle was, build a website. build content on said website. ignore it. Refresh once every 3-5 years. If you build apps like that you’re dead, you’re not building value.  For website focused on consumer products the cycle was similar with an attempt to ‘drive traffic’ by some sort of witchcraft.  The people who were good at witchcraft became winners. 

As there were winners and losers – it might be worth thinking about what the winners did.

The winners were companies like Fuel Industries here in Ottawa, co-founded by one of my high school friends older brother. Fuel was founded by a few guys who had already worked on other web design projects. They focused entirely on creating web-flash sites that would add to and leverage real-world marketing campaigns with nifty online only aspects. Essentially, they were going to build stuff  to encourage you to push your friend to visit the website, I remember the pitch well, they called it the network effect and pointed out Hotmail’s advertising in their emails as an example… life was simpler in 2002. Today we’d call it online-advertising or advergaming, which is a terrible name. 

In the beginning this was them pitching development for web/flash games on Shockwave.com and other sites. Eventually, it led to many other opportunities like branded Facebook games and a McDonalds game, there other exciting ones too (dodge?). What they did build was expertise in leveraging existing print/media campaigns to meet a specific awareness need that media departments were having a hard time engaging online. Fuel didn’t pitch to the developers of a companies online media, the existing website mandarins – they went straight to the advertising departments provided metrics to them ahead of any pitch for ‘online campaigns’. They created a value prop (ROI) for their niche, spec’d it, helped the media department develop a case around their solution and they sold it. This sounds like Sales 101 and it is – oddly not many others did this and few excelled at delivering like they did. I think thats because they thought like marketing people rather then developers. 

So what lesson was there and how does its translate?

 For app developers (internal or external) have an intelligent sales prop and rock solid delivery. But one of the lesson’s out of the whole boom and bust in web development sites was this. Build that product with a specific target and focus in mind and deliver on it, that’s what the media departments want – a market segment they can’t reach traditionally or cheaply (best of all – they have a better budget cycle). Otherwise you’re just a web developer skinning Joomla and eking out a living on the 3-5 year website revamp.

So…. ‘Build the product for a deliverable market that you’re customers not engaging.’ 

 Liam Britten’s post on techvibes sparked all these thoughts and I’m just going to quote him here.

Liam’s point is that he questions

 the utility of companies like Home Depotand Air Miles building apps. I don’t know too many 40-and-over contractors (Home Depot’s prime demographic) or soccer moms (Air Miles prime demographic) who have smartphones. So how useful could these apps really be for a business?

He had a lot more to say and I don’t fully answer all his views. But I think Liam is looking at this wrong, as I often do on this market.

Quite simply, we sometimes miss the point of what the Apps business should be about and what Air Miles/Home Depot are actually doing. Home Depot delivered their app initially only for iPhone and there’s a method to their madness. Build the product for a deliverable market that you’re not engaging. Otherwise – why invest the money?

Women.

Women prefer iPhones. Women are buying more homes. Home depot wants to engage women and more. Some smart App developer decided to make a pitch that he could push better engagement with a specific target market then their website was getting and I think they’ll be one of the winners.  Women are defined target growth market for Home Depot, they don’t like the stores and they have trouble finding the items they need and now we know why they need an app. To be a fly on the wall of their meeting on their apps analytics. 

In Air Miles a similar game is being played (though much less intelligently.) Air Miles has soccer moms.. so the iPhone will work on that front. The next big target market, Millennials. Get them into the rewards system while they’re young. Up until now there’s being zero engagement of this target market and thats where they’re going, I’ve been told a a focused website is in the works with an App to match, the joy of being an Ivey grad is the network and the latest scuttlebutt you get. 

What I’m trying to say here is that while I’m thinking 75% of the App businesses as we know them will be gone in 3 years. The winners will be the ones who engage their customers by delivering services for specific markets that the Mobile Apps open up for them. The companies with a great creative director, a brilliant engagement team, and proper customer focus will win, not unlike every other web dev business. But the days of technology being the driver of this opportunity is long gone.

The Author

Hi. My name is Matt Roberts, you can find me at www.mattroberts.com.

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