New data and trends from the iTunes store

The release of iOS 2.0 in July 2008 is arguably the defining moment of the smartphone era, contributing (along with 3G connectivity) to the iPhone moving from a good if limited device to the archetype that, even 5 years later, all other mobiles are striving to first replicate and then improve upon.

The App store has been a major success for Apple, with Horace Dediu estimating that they produce $1.6bn in revenue per quarter. We are approaching the occasion of the 50 billionth worldwide app download, and to coincide Apple have updated their all-time charts for a number of territories.

They previously did this on the occasion of the 25 billionth app download, in March of last year. 25 billion apps downloaded in 14 months equates to an average of around 60m downloads a day (with Horace Dediu putting the current daily rate at around 70m).

Last time I took a look at some of the trends within the charts. I’ve repeated that here, with ten bullets below. All data correct (apart from any typos that slipped through) as of May 2nd 2013.

  • Stability: The majority of the top apps are holdovers from the previous list – 13 of the 50 paid apps are new, and 20 of the 50 free apps. I’ve counted YouTube and Google Maps as new apps, although different builds did exist previously
  • Games still dominate: 17 of the top 25 paid apps on both iPhone and iPad are games
  • But What’s App stands alone: What’s App is the most popular paid for iPhone app, and is the only paid-for social networking app fits in the list. Although existing downloads won’t be discounted, it will be interesting to see whether the mooted 69p a year fee will deter new users from downloading
  • Franchises have emerged: Although there are exceptions, many of the top apps are from major companies and even those grassroots successes – Angry Birds, Draw Something – have been sucked up into either major merchandising and sequelitis, or bought out. Angry Birds is the poster-child for success, and Angry Birds Rio is the only title of theirs not to make the chart
  • But it is still possible to break through: 4 Pics 1 Word has become this year’s Draw Something, and has made both the top iPad and iPhone free charts despite being out for less than 3 months
  • Price homogeneity: The rise of in-app purchases as a legitimate – if controversial – revenue generator means that prices have dropped to around the 69p mark. Electronic Arts have heavily discounted their titles, including FIFA 13, to raise the user base and drive in-app purchases
  • Few five star games: Inevitably, scale can lead to hype and disappointment and so only 3 of the 100 apps featured have 5 star ratings – Cut the Rope and Plants vs Zombies in iPhone, and The Room on iPad
  • Free entertainment apps lag in score: Free music and entertainment apps score relatively lowly – with the exception of TV Catchup, the highest score is 3.5. YouTube trails with a score of 2, presumably due to complaints that the previous pre-installed app was removed (at Apple’s behest)
  • Device differences remain: 12 free apps and 9 paid apps appear in both iPad and iPhone lists, but the differences point to how the devices remain distinct. The iPhone is a personal device used on the go for timely information; the iPad is a lean-back device, that can also be used for creation
  • The future: How will the list differ when the next milestone (100 billion?) is reached? Will we see Vine or Snapchat enter the free charts? Will the next wave of franchise games prove more popular than the last? Will the TV companion app to beat all other companion apps truly emerge? I’m going to chicken out of making any predictions, but any or all of the above could happen

Pictures of the charts are below, and can be clicked on to expand into a more readable version.

iphone paid ipad free ipad paid iphone free

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Data and trends from the iTunes store

To tie in with their 25 billionth app download (made by Chunli Fu of Qingdao, China), Apple have released the top 25 rankings for their paid and free apps within the UK iTunes App Store. Some interesting (and in some cases unexpected) things have emerged.

Data below is correct as of March 6th. Where apps are universal (ie they can be downloaded on both iPhones/iPods and iPads), I have included their reviews and rating within the iPhone charts as iPad cannot be split out (and the disparity in installed bases means it is safe to assume that the majority of actions relate to iPhones). Apple don’t release download figures, but news stories such as this one can help establish some benchmarks for estimates.

Click the images or open them in a new tab in order to make them more legible.

So what can we tell from these charts?

  • Games dominate the paid-for charts: 42 of the 50 paid apps are games, but it doesn’t dominate the free charts to the same extent – although people pay for games, they are transitory and can be superseded by sequels or alternatives – unlike information-based apps
  • Games are much better at encouraging ratings/reviews: Games have three times as many reviews/ratings as non-games: Demographics might play a factor (younger game players being more likely to rate) but many games also prompt people within apps to give reviews or ratings, as positive reviews are a major factor in deciding which app to download
  • It helps to be early: Despite ever-increasing user bases, only 4 of the top 50 iPhone apps were released after 2010. Getting in early, and reaping the benefits of large numbers of reviews and ratings, provides a strong profile even among newer users
  • Time sensitivity on iPhone is key: Nearly all of the top iPhone apps (outside of games/entertainment) are either time sensitive or impulse – social networks, news, weather, search etc.
  • Three of the top 4 iPad apps are TV catch-up services, and another four of the top apps are news services. The tablet is living up to its reputation for lean-back media consumption
  • But can the iPad also cater to business needs?  A quarter of the top Paid apps (including the number one app) are productivity or education based. This suggests the affluent, business-orientated user base are experimenting with using their iPads to replace other devices. Will this experimentation turn into habit?

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Learning from Steve Jobs

Steve Jobs' fashion choices over the years

Understandably, technology news over the past week has been dominated by Steve Jobs’ resignation as Chief Executive from Apple. While he will stay on as Chairman, Tim Cook – former Chief Operating Officer – will take the helm.

There have been many wonderful pieces on Jobs (though some do read like obituaries) – these from Josh Bernoff and John Gruber being but two – which cover many angles – whether personal, professional, industry or other. I’m neither placed nor qualified to add anything new but I have enjoyed synthesising the various perspectives. Yet invariably, the person saying it the best was Jobs himself:

  • He knew what he wanted – “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking” (Stanford commencement speech)
  • He felt he knew better than anyone else – “The only problem with Microsoft is they just have no taste. They have absolutely no taste. And I don’t mean that in a small way, I mean that in a big way, in the sense that they don’t think of original ideas, and they don’t bring much culture into their products.” (Triumph of the Nerds)
  • He, along with empowered colleagues, relentlessly pursued this – “You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”(Stanford commencement speech)
  • He was a perfectionist – “When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.2 (Playboy)

NB: The quotes above were taken from this Wall Street Journal article.

In Gruber’s words “Jobs’s greatest creation isn’t any Apple product. It is Apple itself.”

In 14 years he took Apple from near-bankruptcy to – briefly – the biggest company in the world by market capitalisation. He has been enormously successful. And while possibly unique – his methods run counter to textbook advice on how to run an organisation – a lot can be learned from him.

The thing I have taken most from this is Jobs’ uncompromising nature. If people weren’t on board with him, then to hell with them. This of course led to his dismissal from Apple in 1985. And his dogged focus on his preferences has informed his fashion choices over the years, as the above picture illustrates.

It might seem strange for a market researcher to take this away, particularly since research is stereotyped as decision-making by committee – something which Jobs despised:

  • “We think the Mac will sell zillions, but we didn’t build the Mac for anybody else. We built it for ourselves. We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research. We just wanted to build the best thing we could build.” (Playboy)
  • “For something this complicated, it’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” (BusinessWeek)

Unfortunately, this stereotype is often true, and I have been guilty of perpetuating it on occasion.

One example was when trying to get a project up and running (on a far smaller scale than rescuing Apple admittedly). With a lot of stakeholders, I tried to include as many of their wishes and requests is possible. The end result was bloated, incoherent, unfocused and over-deadline. It wasn’t one of my finer moments.

Rather than bolt everything on, I should have appraised all the input and only included that which remained pertinent to the core objective. I lost authorship of the project, and it suffered.

While there will be counter-arguments, many public failures do seem to be the result of committee-made decisions. Two bloated, incoherent examples that immediately spring to mind are Microsoft Office 2003 and the Nokia N96. Conversely, there are many examples of visionary micro-managing leaders that have driven a company to success – Walt Disney, Ralph Lauren and Ron Dennis to name but three.

I am a researcher rather than a consultant, and so don’t intend to fully adopt this approach. However, it appears that there is a greater chance of success when primary research or stakeholder input informs, rather than dictates, the final decision.

Steve Jobs knew this. His flagship products weren’t revolutionary (IBM, Microsoft, Nokia and the like were the primary innovators). But his genius was in refining a variety of inputs and stimulus, and moulding them into an expertly designed final product.

And that is something to aspire to.

sk

Recommended reading – 24th July 2010

I’ve been a bit neglectful of this blog over the past month or two. Come September, this should change.

I haven’t written a “recommended reading” post for over a month, so I will rectify that by posting two this weekend, featuring the very best of the various articles and blogs I’ve read over the past five weeks.

Without further ado, the first seven links I would strongly suggest that you click on are:

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Recommended Reading – 24th April 2010

I decided against posting a list last week, and instead held out until I had a decent number of quality links worth sharing. I now have a high-quality list, which can be found below:

  • James McQuivey on the Forrester blog argues why Hulu should be available for subscription. The comparison to Netflix is a good one, but whether the networks (not to mention the operators that carry them) would ever approve this is a completely different matter.
  • Asi Sharabi lists 8 sins of nu-marketing folk. Sample quote for the sin of dogmatism: It’s easier to shout “it’s all about this!” (’this’ being the buzz-word of the day: engagement, relationships, co-creation) than to scrutinise the context face the uncertainty, and admit the complexity
  • Alastair Gordon writes a very interesting piece on what the ownership of market research companies could look like in 2020. He posits that operations suppliers could takeover some of the client-facing project management/analysis companies. I’m not sure I agree – research quality is largely hidden and thus undervalued, so I don’t think these companies would have the ability to successfully integrate in this way – but a thought-provoking theory.

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Fighting potential irrelevance

Disclaimer: My employer, Essential Research, has worked with several of the UK network providers in the past, and hopes to do so again in future. All opinions expressed in this blog post – and this blog in general – are my own.

The first to market isn’t always the ultimate category “winner”. There were cars before Ford and social networks before Facebook, to give just two examples. Incumbents may hold the greatest influence, but through innovations and developments of products and services their position is rarely fully secure. Eventually a change of business strategy will be required.

I’m wondering if this is what the mobile phone networks are about to undergo.

For the past decade or two, the networks have had the power in the mobile market. They controlled the distribution – through both spectrum and their walled garden approach to content and services. Hence the huge bidding war when the UK government auctioned off spectrum for 3G a decade ago.

But this looks to be changing, as penetration of internet-enabled handsets that access the world wide web – both on a 3G network and on Wifi – shift the focus. While the debate over open access (symbolised by Google) and closed access (symbolised by Apple) continues, it appears that the shift in focus is to the detriment of the networks but the benefits of the operating system, and thus the handset.

This article – on the news that O2 and Orange are joining an open platform for applications – says that ‘The mobile phone networks fear that at the moment they are in danger of becoming little more than “dumb pipes in the air”‘

I’m sure they have methods to standardise the services across different screen sizes, resolutions, handsets and operating systems but it will be interesting to see whether it can compete with the OS based offerings of Apple, BlackBerry, Google and Nokia.

Do this mean mobile networks will go the way of ISPs? Viable businesses, but not wielding the level of power that AOL et al were hoping to achieve.

It is possible, but not inevitable. The main issue for networks is that when they work, they are invisible. We only notice when they fail, and most people will only contact network customer care when they want to complain (sales calls/contract renewals excepted). No matter how good (or otherwise) this service is, it is still ultimately dealing with negative issues.

A handset and operating system should also “just work”, but its visibility means we can also be delighted – whether through eye-catching menus or a satisfying tactility to the buttons or touch screen.

This visibility also means the handset is more closely associated with the service. Networks are still defined by the coverage and quality of voice communication above all else.

The networks risk becoming a utility, where price and quality are the only defining features.

The need to diversify is apparent, but I don’t think this should be in applications.

Aside from the handset/OS competition, there is a huge question-mark over the long-term viability of the applications market. Should HTML5 launch and grow, the balance of power may once again shift – this time from the operating system to the software or service provider. To the consumer, the delivery mechanism is largely irrelevant – they just want the best possible service in the most convenient format.

I’m also sceptical about exclusive content deals. Orange have successfully done this in France, but it raised anti-competitive issues and, ultimately, I think audience scale will mean openness will win out (I also think this is true with handsets trying to get content exclusivity).

Instead, I think partnerships – across a range of industries – are the answer. Mobile networks already have a significant presence in certain areas – such as O2 with live music and Orange with film – and these can be extended. There are also plenty of opportunities to provide complementary services – O2 moving into finance seems like a logical step, for instance.

Like gambling, one of the hardest things in business (so I’ve been told) is knowing when to call it quits. The era of networks dominating the monetisation of content and internet-based services looks like it is drawing to close. Yet there are many potential new revenue streams to develop. Whether picking the right strategy requires the luck of the gambler or not, time will tell.

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Image credit: Me

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The general public doesn’t need an iPad

iPad - evolution by Steve JobsSteve Jobs’ powers of presentation and salesmanship have been well remarked upon. However, one statement in his recent keynote address launching the iPad jarred for me.

All of us use laptops and smartphones now

Who is this “us”? The people in the audience? The people in Apple’s target market? Because it certainly isn’t everyone.

Data from Brandheld indicates 24% of UK mobile phone owners aged 16 or over think they have a smartphone (given our consumer-friendly definition of one), while 59% say that they have a laptop with wireless broadband. 17% say that they have access to both.

To an extent, this is just me being pedantic. Of course everyone doesn’t have a smartphone or laptop. Not everyone has a phone of any kind, let alone food, clothing or shelter.

A device doesn’t necessarily need 95% penetration to be ubiquitous; it merely needs to be the most desirable. Look at the iPhone. While sales are still increasing, probably no more than 1 in 20 people in the UK currently own one. Yet it has defined the category.

But I think the turn of phrase is interesting because it indicates the scope of the iPad. It is not a mainstream device. Not yet, anyway.

More so than the iPod and iPhone, the iPad is a disruptive technology. The market for tablet computers isn’t yet fully defined. There is no well established pre-cursor like the Walkman or Nokia series to create consumer expectation, for Apple to then surpass. The Kindle, the e-reader et al are nothing more than niche.

Unlike the iPod and iPhone, there is no obvious unique selling point to differentiate the device. Certainly, nothing to rival “1,000 songs in your pocket” or touch screen mobile web browsing. It will be a tough sell.

The five (original) steps in Everett Rogers diffusion of innovations model are

  • Awareness
  • Interest
  • Trial
  • Evaluation
  • Adoption

With disruptive technologies, the challenge is getting beyond the second stage. Aside from going to the Apple store on Regent Street in London, the only opportunity people in the UK will have to trial the technology is by testing an iPad that a friend or associate purchased. The path to adoption will be very slow.

Additionally, interest piques if, in general terms, a device is able to demonstrably save someone time, money or effort. The iPad appears to be a jack of all trades, but is it a master of any?

  • Web browsing: Web browsers themselves are optimised for mouse and keyboard navigation. Nevertheless, touch-screen specific web applications can modify and improve the experience
  • Video: Video is passive, so a touch screen isn’t really relevant. For lengthy programmes, the iPad will also become uncomfortable unless some sort of docking station is purchased in addition
  • Reading: This is where the potential lies. Somewhat unfairly, the iPad is essentially a glorified Kindle. But as with the Kindle, the high outlay and the ongoing costs render it worthwhile to only the most avid readers
  • Music: There seems to be little discernable additional benefit
  • Gaming: There is some real opportunity for multi-touch gaming but there is also a danger the iPad gets caught between the more portable iPhone and the more immersive Project Natal/Motion sensitive in-home gaming
  • Photos: There are certainly advantages to storing and displaying photos, but the lack of camera on the iPad is a startling omission
  • Brushes – an application that could be genuinely useful, but it is not a deal-breaker. Unless you want to pay $500 for a glorified etch-a-sketch.

Admittedly, the first generation iPod (bulky, mac only) and iPhone (2G, no GPS or cut, copy & paste) were relatively poor. A killer feature could emerge on the 2nd or 3rd generation iPad. But at this stage, it appears to be little more than a status symbol for a small niche of technology enthusiasts to store next to their minidisc, neo geo and em@iler.

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