In the past couple of years, the marketplace for smart-phone applications – the programs ranging from the useful (business card reader) to the mission-critical (professional software) to the inane (iFart) – has grown exponentially.
Valued at $2-billion today, the sector is projected to expand tenfold within five years. This growth covers not just the number of apps out there, but the platforms for them, as ever more companies release their own phones: In the late 1990s, there were two mobile operating systems; today there are more than 10. The splintering has made the mobile app market, long driven by independent programmers and entrepreneurs selling their wares virally, increasingly crowded, cutthroat and expensive to penetrate.
Your Business recently spoke with Boyd Cohen, founder and chief executive officer of Vancouver's 3rdWhale Mobile, about his challenges marketing the company's Find Green app and his thoughts on mobile-app revenue models in general.
It seems like everyone is developing mobile apps these days. How did your company get its start?
I have a PhD in entrepreneurship, and I've been a professor of sustainable business for 10 years. I started 3rdWhale with the focus on building green, primarily mobile apps. This was just when Apple was opening its online store to app developers. Find Green helps consumers locate healthy, green businesses – any business that sells products that are certified, or has a green angle to it, or has greened its operations. The app costs $1.99 on the iPhone. We're also on the BlackBerry and Google's Android.
Tell me how your business model has evolved.
We had high hopes, as did hundreds of thousands of others, that consumers would be willing to pay for high-quality content for their smart phones. That proved not to be the case except for some sectors, such as gaming; or very niche, high-end things; or apps affiliated with very well-known brands, like Twitter. But if you're a new brand, like us, getting people to pay for your content, no matter how little it costs, is a struggle.
We looked at the traditional ad models, working with players like AdMob where you get ads delivered to your apps. The problem is you annoy your users. More importantly, that only works if you have a very sizable user base. Everybody in the app development world thinks that you'll be the next big thing and have millions of downloads. But there are no more than 10 apps that have more than a million downloads. The overwhelming majority don't. We've gotten amazing coverage, from TreeHugger to The Huffington Post and CNBC. That helped create buzz and brand, but it hasn't translated into piles of new sales. Even being listed on Apple's “staff picks” section, which did wonders for our sales, was only a temporary peak.
Boyd Cohen, founder and chief executive officer of Vancouver’s 3rdWhale Mobile, based in Vancouver.
Is it possible, then, to build a business on mobile apps today? Is it a mature enough market?
Most app developers have found it pretty disheartening. You can't justify a full, scalable business off a single iPhone app, or even five apps. If you work out of your home in your pyjamas, which a lot of app developers do, you may be more successful, but if you have a staff and an office, that's hard to do. You need critical mass to monetize the app. You need a big hit.
What have been the biggest challenges for you?
