Source : Businessworld | View Original

There is an app for every reason. But will the app economy support $1 billion plus companies?

In Bangalore, Kavya Madiah, 17, spends at least a couple of hours everyday playing Ra.One Genesis on her Nokia N8 smartphone. Kavya, a die-hard Shahrukh Khan fan, lost no time downloading the game application on the superstar’s sci-fi movie the moment it became available. Vishal Gondal, CEO of Indiagames, which developed Ra.One Genesis, says the app has seen over 2.5 million downloads so far from the Nokia Ovi app store. Indiagames, now a part of Disney, says the app has been downloaded several million times already on different platforms. It is available on iPhone/iPad and Android versions as well.
In Chennai, P.R. Rajendran, director of Nextwave Multimedia, is trying to build a business around mobile apps. Before he joined the apps bandwagon, Rajendran worked for a decade trying to create a successful software services company. He changed course when he came to the conclusion that the software services business had become a “scale game.” Clients wanted to know how many thousand engineers an IT services firm employed, before giving an order.
Rajendran says the app market is far better for small, but nimble firms such as his. He has a catalogue of 400-odd apps on multiple mobile operating systems (OS), including games such as Chef vs Chicken, Mission Possible, Mobile Table Tennis and Find the Word. He says several of his apps have seen million-plus downloads, and generated significant returns. “How significant?” Rajendran smiles and says: “Significant enough to ramp up our hiring.”
In India, an estimated 100 million apps are being downloaded a month currently, even though only about 30 million of India’s 881 million cellular phone connections are internet enabled. The global figure for monthly app downloads is estimated to be a couple of billion currently — one billion or so being downloaded per month from Apple’s store alone. The global app economy was estimated to be worth $4.1 billion in 2009, and is projected to grow to $17.5 billion by end of 2012, according to a study commissioned by mobile apps store GetJar.

Across the globe, hundreds of millions of consumers like Kavya are providing the fuel for the app economy. And hundreds of thousands of entrepreneurs and developers are trying to make their fortunes from this wave. App entrepreneurs across the world take inspiration from Rovio, which was an obscure Finnish game maker until it produced Angry Birds — a game in which players use slingshots to send angry birds to destroy smirking pigs and their dwellings. At last count, Angry Birds has seen over 500 million downloads, and it had even given rise to copycats. Rival game-maker Zynga (of FarmVille fame) launched an unsuccessful $2.25 billion bid for Rovio just to get its hands on the Angry Birds franchise.

WHAT’S IT ALL ABOUT
A mobile app is a piece of application software that executes a specific task. They are preinstalled on phones or can be downloaded from distribution platforms. Apps have always existed. Ever since Netscape debuted with Navigator, the browser had become the entrepot to the digital world. Lowpowered devices with flaky connections and low-specs hardware meant dedicated apps became popular. So there is an app to check weather, play chess etc. While independent third-party platforms such as GetJar, MobiHand and Pocket-Gear have existed for years, the launch of Apple’s App Store in July 2008 with carefully curated apps triggered an avalanche of interest in app development. Companies quickly realised that more the number of apps and more popular apps available on a platform meant it would help lock in customers. Those who successfully catered to the exploding demand, such as Rovio, have had multibillion dollar valuations.

 

The app economy did not even exist a few years ago. Sure, there were a few third party apps — calculators, currency converters, a few games — that came bundled with mid- and high- end mobile phones. There were also a few standalone app stores — but they did not do any huge business either.
It all changed in July 2008 when Apple launched its app store with a mere 500 third-party apps, some free and others priced, with many of the priced apps costing less than a dollar each to complement its iPhone. There were multiple app options for almost any task  — whether they were related to productivity, news, entertainment or games. You could download clocks in different shapes and sizes, games of every kind, news aggregators, photo manipulators, free digital book libraries, exercise apps, calculator apps, medical apps, and dozens of other fun things. iPhone consumers could not get enough of it. Suddenly, the app economy took off.

FAST FACTS ON THE BURGEONING INDIAN APP INDUSTRY
  • 100 million apps being downloaded in India every month*
  • Nokia India alone claims 48 million app downloads from its Ovi store each month
  • The global app market is at $4.1 billion in 2009; set to hit $17.5 billion by the end of 2012**
  • Most of the Indian domestic app market follows freemium model
  • India's app developer base is estimated at 250,000#
  • The 30 million mobile Internet user base in India is projected to go up to 237 million by 2015##
  • Total mobile connection user base stands at 881.4 million^
  • 97 per cent of Indian phone market still is prepaid by volume^^

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