the business of mobile apps

The Business of Mobile Apps

February 2012 Brian Hurley

President and CEO, Purple Forge Corp

© 2012 Purple Forge Corporation

© 2012 Purple Forge Corpora1on

Spread the Love

•  I am happy to freely share my knowledge and experiences to help you in achieving your goals

•  Only expectation is you do the same in the future for others

•  Strengthens our community •  You will never regret the time

invested in sharing. You will learn as you share your learning. Added bonus of generally “doing good” as Tony says!


Agenda

•  Pre-amble •  Part 1 - Building a Mobile App Business •  Discussion •  Break •  Part 2 - Selling, Challenges, Operationalizing •  Discussion


Caveat Emptor

•  Based on my experiences with Purple Forge and Liquid Computing

•  My opinions •  There is more I don’t know then

I know •  I am not a lawyer •  Mobile is a rapidly developing

and dynamic environment


Purple Forge -‐ Overview •  Founded 2008 •  Headquartered in Ottawa •  Federally incorporated •  Leadership:

–  Brian Hurley, President and CEO –  John Craig, VP Sales and Marketing

•  Private company – no investors •  Hosted mobile app solutions •  iOS, iOS Tablet, Android, Mobile Web, Blackberry •  Over 100 apps published •  Reseller partners in US, Canada •  Sales in US, Canada, South America, Europe, Australia •  Revenue growth doubling every year •  International awards and recognition


Purple Forge -‐ SoluAons

•  Political Campaigns •  Government •  Market Research •  Conferences & Events •  Print Replacement •  Tourism •  Public Consultation •  Advocacy and Associations •  Celebrities


Purple Forge OpportuniAes •  Virtual Concierge Licensing •  Postcard App Licensing (10+ themes que’d up) •  Customer Portal Licensing •  Reseller / Referral Partnerships •  Jobs

[email protected]


The Mobile Apps Gold Rush

Ref: Telus Mobile SoluAons, Jan 2012


Gold Rush Stories


Case Study 1


Case Study 1

The idea is hard


Case Study 2


Case Study 2

An idea needs to have a path to make money


Case Study 3


Case Study 3

Validate path to money with prospective customers


Building a Mobile App Business

Developing an Idea

Determining how idea can make money

Turning idea into an App

Selling

Part 2 Part 1


Making Money with Apps Making Mon

ey

Product Focused •  Pay for Downloads •  AdverAsing (e.g. Apple iAds, Google Ads) •  Sponsorship (e.g. splash page, branded app) •  Digital “Goods” (e.g. game levels, extra health/points, new features) •  SubscripAon/Memberships (e.g. content, feature use, membership access) •  TransacAon fee(s) (e.g. per transacAon fee, % of transacAon) •  Sell physical products (e.g. Ackets, printed photos) •  DonaAons Service Focused •  Build Apps on Contract to Customers , e.g. Macadamian Technologies •  Sell Hosted Apps to Customers, e.g. Purple Forge Complementary Product Focused •  License Source Code to App Developers •  Sell Cloud Services to App Developers • Marke:ng/Business Development Services to App Developers •  Sell complimentary hardware (e.g. auto diagnos:cs, medical, card readers)

* -‐ not in scope for today


Downloads -‐ Opportunity

h[p://gigaom.com/apple/the-‐average-‐ios-‐app-‐publisher-‐isnt-‐making-‐much-‐money/


Downloads -‐ What Does it Take?

United States (Daily Downloads) •  Top 50: 25 thousand •  Top 25: 45 thousand •  Top 10: 80 thousand

Canada is approx 1/10th US

Ref: h[p://www.disAmo.com/blog/2011_12_quora-‐answering-‐series-‐download-‐volume-‐needed-‐to-‐hit-‐the-‐top-‐charts/ h[p://www.apple.com/itunes/charts/paid-‐apps/


Digital Goods

h[p://blog.flurry.com/bid/67748/Consumers-‐Spend-‐Average-‐of-‐14-‐per-‐TransacAon-‐in-‐iOS-‐and-‐Android-‐Freemium-‐Games

“In –App Purchase”


AdverAsing

h[p://webdesktoplife.com/post/6684344795/making-‐money-‐with-‐iads-‐not-‐so-‐easy

h[p://forum.unity3d.com/threads/55191-‐iAd-‐StaAsAcs

h[p://www.galarina.eu/blog/2011/9/24/photometa-‐iad-‐revenues.html


Sponsorship Can sell sponsorship of the app as a whole or sponsor elements separately For example, can sell sponsorships for elements of an app: •  Splash screen logo •  About page •  Pop-up •  Slide in/out banner ad •  Individual functions/features of app Sponsorships can be time-based, e.g. sold year by year, or during specific days (if time-related event)

We’ve seen conference-app related sponsorships ranging from $5K – $25K+ Sponsors are typically looking for name/brand visibility to app audience or app owner


SubscripAons – Content

•  Media content subscription, e.g. New York Times, Netflix, Zino

•  Books (e.g. iBook), Publications •  “In-App” and “Out-of-App” purchase


SubscripAons – Membership


TransacAon Fees


Physical Goods


Build Apps on Contract •  Contract Types

–  Fixed cost –  Time and materials

•  Contract Scope –  Server + Mobile Client –  Mobile Client Only

•  Typical Rates –  Hourly Rates: $20 - $150/hour –  Fixed Fee Contracts: $10K - $100K+

•  Typical Terms –  50% on signing, 50% on sign-off –  Usually have to assign IP and source code to the client

with indemnification •  Competition

–  Thousands of companies offering “hired gun” services –  Lots of Offshore services and proxy companies pushing

price down –  Large companies starting to do work in-house for large/

strategic – but will always be demand for custom dev


Hosted Apps

•  Setup fee •  Monthly hosting fee •  Base offer - modules •  Customizations extra •  One-stop solution •  Fast delivery •  Economical cost •  Worry free support


Cloud Services


Smartphones Key A[ributes Demographics •  Over 1/3 of population owns a

Smartphone and growing •  Replacing desktop as primary

method of accessing online information

Technology •  Location aware •  Push notifications •  Compass •  SMS •  MMS •  Camera(s) – Front and Back •  Video(s) – Front and Back •  Audio recording •  Voice recognition •  Accelerometer •  Touch interface •  WiFi •  Bluetooth •  NFC •  Cloud services (e.g. Siri, Google)


Why Do People Use Apps? •  Access to internet is continuous during day for smartphone users - apps

are downloaded anywhere and at anytime – considered rewarding in itself… •  Apps preferred over mobile web because:

–  Quick access –  Direct access –  Ease of use –  “Offline” functionality

•  Main reasons for using apps: –  staying part of the social loop –  building image and appearance –  managing everyday chores –  instant access to know-how –  structure and self-discipline (becomes part of routine for day) –  receiving inspiration/ideas –  immediate updates on areas of interest –  infinite entertainment/distraction

Ref: Device Study 2010 The US Results, Ericsson


Finding the Idea -‐ Where to Start?

Technology

• Mobile feature centric

Category

• Game • Social • Etc

Content

• Media

Add-‐on

• Enhance exisAng business processes

Solve Problem

• Previously not possible without mobile

Hired Gun

• Build what a customer will pay you for

Sell Talk with

prospecAve customers

Talk with prospecAve customers


Gejng to “the” Idea

Establish the evaluaAon parameters

Evaluate Ideas against parameters

Narrow down Invest Ame incrementally

Fastest Ame to $$$

Make your decision


Filtering Ideas (Example)

Column Headings •  Ranking •  App Name •  App DescripAon •  Comments •  Expected Ease of Development (Quick (based on app example template, mainly text-‐based)/Easy

(client only, minimal graphics)/Medium (GPS, Music/Sound Effects, staAc graphics with simple manipulaAons)/Hard (heavy animaAon, AI player, client and server sides, lots of content creaAon, ongoing maintenance of server content))

•  App Category •  Addressable Size (H/M/L) •  "Cool" Factor (H/M/L) •  A "Candy Bar" Purchase Decision? (Y/N) •  Uses Graphics (staAc/dynamic) •  Uses AI Players/Game Control Logic (Y/N) •  Uses 3G Network (Y/N) •  Uses GPS (Y/N) •  Uses Accelerometer (Y/N) •  Uses Audio Input (Y/N) •  Uses Audio Output/Sound Effects/Music (Y/N) •  Uses MulA-‐touch (vs single-‐touch, single-‐touch swipe) Interface (Y/N) •  Uses Client-‐Server (Y/N) •  Uses Manual Tasks to Maintain Server/Network Content (Y/N) •  CompeAAve Apps Exist (Y/N) •  Price per Client •  Price per annual service sub •  EsAmated Selling Period (weeks) •  PenetraAon % EsAmate •  Extra Development Costs (e.g. any special hardware/configuraAons, libraries) •  Est Copies Sold •  Est Annual Revenue

Talk with prospecAve customers


Filtering Ideas (Example)

Define how it will make money

Define revenue opportunity (e.g. how much, who, how many, when) (talk to prospecAve customers)

Understand potenAal compeAAon and posiAoning/advantage

Determine Ame and cost to implement and sell

Confirm it will be profitable


Where Are These Customers?

One way to meet prospective customers is to join the Ottawa Chamber of Commerce and participate in their

networking events.

h?p://o?awachamber.ca



First municipal politician First bilingual municipal app (French/English)



•  Pick up the phone and do a cold call – the worst that can happen is they say “no”

•  Ask your friends and family who they know – get an intro

•  Network, network, network


Aser the “Idea” •  Target market •  Team formalization •  Business plan

–  Sales plan –  Implementation plan

•  Build vs Buy/License vs Partner –  Financial plan

•  Costs: labour, 3rd party contracts, servers, operations infrastructure, marketing, legal

•  Revenue: sales

Only do the minimum to get to the next stage of the business


Target Market

App Store

Device

OS Version

Plauorm

Carrier

Language

Country

Interests

Age

Gender

TECH REGION

PEOPLE


Necessary Team Skills Mix

•  Business Leadership •  Sales and MarkeAng •  Technical •  CreaAve •  OperaAons

Advisors

Contract

Part-‐Time

Core Team


Components of an App

User Experience Editorial Content Digital Media Content Mobile Plauorm(s) Coding Mobile Plauorm(s) TesAng Cloud Services Coding Cloud Services TesAng Cloud Services IntegraAon

APP


Plauorm Technology Choices

Op1ons Examples

Plauorm iOS, Android, Blackberry OS, Bada, Web

OS Versions Android V2.3, Blackberry OS5, iOS4.2

Form Factors Smartphone, Tablet, Phablet

Devices Blackberry 9000, Nexus S, iPhone 3GS, Fire

Development Tools -‐ NaAve ObjecAve C, C++, Java

Development Tools -‐ Web HTML5, CSS3, Javascript, JQueryMobile

Cross-‐Plauorm Frameworks Appcelerator, PhoneGap, Sencha

Game-‐Oriented Development Torque, Unity, Game Salad

Apps as a Service Purple Forge


Game Environments


Cloud Services Op1ons Example

Role your own •  Servers: Amazon, Rackspace, GoDaddy, .. •  Sosware: e.g. Open Source Sosware •  Services: e.g. Apigee

Commercial APIs

•  YouTube, Flickr, Facebook, Twi[er, Picasa, LinkedIn, Flurry, Google AnalyAcs, Urban Airship, Parse, Apple Game Center, Apple Push NoAficaAon, Google Search, Google Maps, YellowPages, OpenFeint

•  See h[p://programmableweb.com for more examples

Usage ConsideraAons

CondiAons of Use SLA Cost (parAcularly wrt usage) Capacity/Scaling, Usage quotas, Usage thro[ling rates Data Privacy Data Ownership Security FaciliAes LocaAon


Technical Resourcing •  Project management •  Technical leadership •  ImplementaAon skill sets will be dependent upon the

technology choices made (or vice versa) •  Different implementaAon skill sets required and exist

in individuals •  Skills vary by plauorm, e.g. Android, iOS, Blackberry •  Some example skill types:

•  Server Apps and OperaAons •  Mobile APIs •  2D/3D Gaming •  Graphic Designer •  Unity Developer •  Torque Developer •  3D Graphics Model Designer •  User Experience Designer •  Database Developer •  Website Developer •  Tester •  OperaAons


Outsourcing Labour


Outsourcing Infrastructure


Simplified ProducAon Cycle

Project Established

API Spec

Wireframes Prototype/Mockups

Incremental Development

Placeholder Media Test

Add Final Media

Test Sign-‐offs

Submit to Distribu1on

Available for Download


Wireframe Example

h[p://sixrevisions.com/user-‐interface/website-‐wireframing/ h[p://inspiraAonfeed.com/inspiraAon/25-‐examples-‐of-‐wireframes-‐and-‐mockups-‐sketches/

h[p://www.balsamiq.com/


Agenda



Selling

•  Resellers •  Partners •  Direct •  App Stores

“TECHIES” marginalize the effort associated with selling the way “SALES” marginalize the complexity of implementaAon.


Selling – Heavy Lising Resellers They resell your product/service in return for a % of the sale 30%-‐60%. They

may white-‐label. You need to cold call to find Resellers. (Once established they may call you!)

Partners They sell your product as a complementary products or services to their sales. They bring you deals. You may need to work on proposals with them. You need to cold call to find Partners. (Once established they may call you!)

Direct You do all the heavy lising – direct calling to end purchaser. Cold calling. MarkeAng – Website, Google Ads, TradiAonal Media. Closing “reference customers” may be required in order to land Resellers and Partners.

App Stores Publish thru App Stores. Sales via pay per download, pay per in-‐app digital content or subscripAons. App Store collects the revenue and handles returns. They take 30% of sale. They keep their cut on returns. MarkeAng – Website, Google Ads, TradiAonal Media


App Stores Popularity Store User

Exp Submission to Approval

Transac1on Fee

Market leader Best 5-‐ 10 days 30%

Increasing Good Immediate 30%

Rapidly declining Poor 5 to 10++

days 30%

Increasing Good 5 to 10+ days 30%

Mobile Web Steady

Very Poor -‐ Google Search

N/A N/A


MarkeAng Strategy

Publishing in an app store is NOT a marketing strategy


Gejng Your App NoAced •  TweeAng •  Dedicated Facebook Page for App •  MenAoned on related Facebook Page •  PosAngs on related Facebook Pages •  Dedicated domain and website •  Dedicated landing page that supporAng organizaAons all point

to (e.g. h[p://getmyapp.me/appname) •  Dedicated webpage on exisAng organizaAon's website •  MenAoned on shared page on exisAng organizaAon's website •  MenAoned on front-‐page rotaAon of organizaAon's main

website in prominent manner, e.g. large graphic banner •  MenAoned on front-‐page rotaAon of organizaAon's main page

by a link to another page •  Cross-‐linked from related app partner sites to a dedicated

webpage for the app •  In app cross-‐selling catalog (where organizaAon has mulAple

apps) •  App.net Webpage •  “Rate the app” nag •  Blog coverage •  Review sites coverage •  Paid web adverAsing •  Sponsored Blog RSS feed •  Sponsored eNewsleKer •  Sponsored website •  AdverAsing on public transit buses •  AdverAsing on airport screen Ackers •  AdverAsing on airport display screens •  Google Ads Web •  Google Ads Mobile •  iAds Mobile •  Radio On-‐air MenAon/Interview

•  Podcast review •  TV coverage -‐ Local •  TV coverage -‐ NaAonal •  Special Feature by Apple •  New and Notable by Apple •  Mashable coverage •  TechCrunch coverage •  CNN website coverage •  Press Release -‐ PR Web •  Press Release -‐ Self-‐distributed •  eNewsle[er Announcement (exisAng distribuAon related to

organizaAon) •  Print Newspaper Coverage -‐ NaAonal •  Print Newspaper Coverage -‐ Local •  Topic of App -‐ Common Interest •  Topic of App -‐ Local/Regional Interest •  Topic of App -‐ Niche Common Interest •  Topic of App -‐ Seasonal Interest •  Topic of App -‐ Event A[endee Specific Interest •  AdverAsed with/linked to a specific event which has people arriving /

interested on a specific date •  Event collateral -‐ business card handouts with links to download page •  Event collateral -‐ posters at event site registraAon and entrances •  MenAon of app in all press release communicaAons of organizaAon •  MenAon in .sig of email's for members of organizaAon •  YouTube videos •  QR-‐codes in organizaAons print materials •  AdverAsing on print (e.g. magazines, news papers, brochures) •  Push noAficaAon to ask people to "Tell their friends" about the app •  Press event by Mayor •  App wins an Award which is publicly announced by award giving

organizaAon


What Works

•  App Store Featured App •  App Store What’s Hot •  App Store New & Noteworthy •  App Store Top 50, 25, 10 in Category (accelerates downloads) •  App Store Top 100, 50 Overall (accelerates downloads) •  Major Online News coverage •  National Traditional Media coverage – TV, Newspapers •  Regional Traditional Media coverage – TV, Newspapers •  Part of existing coordinated campaign / event marketing •  eMail Newsletters to established list •  App cross selling •  Prominent placement on established org/business website •  Press release •  Awards


The Holy Grails


Press, TV, Papers, Blogs, Apple,…

Apple Featured

Online News Coverage

Big Launch

Digital signage, websites, print ads for specific events


Web, eMail, Media, Event Event Ends

Event Starts

Media Coverage Starts

eMail, Web Launch

Few weeks before Event Starts

MenAoned in associated campaign


Launch, Press, Event

Media Coverage Starts

Week Before Event Starts

Event Starts

Event Ends

eMail, Media, Web Launch



Press, Social, Featured, Event Event Ends

Featured

Strong Press, Social Launch

Event Starts



Do nothing… free… common interest


Do lots… get nothing… go free


Zombiegram


Challenges – Technology

•  TesAng: n x n problem •  MulA-‐language •  MulA-‐version •  MulA-‐plauorm •  App upgrade management •  Dev environment management •  Dev skillsets management •  FragmentaAon


FragmentaAon •  Blackberry is off the scale – includes variants by carrier (BB10 may be

better?) •  Android fragmentation is a rapidly growing challenge •  Apple – constrained, minimal fragmentation •  Form factors - Smartphone, Tablet, Phablet (phone-tablet hybrid) •  Screen sizes / resolutions - graphics x “n” •  OS versions •  OS forks (e.g. Amazon Fire) •  App Stores (e.g. Google, Amazon, Blackberry Android, others++) •  No such thing as an “Android App”, only “Android Compatible”

FragmentaAon = cost to develop, cost of hardware to test on, poor user experience, lengthy Ame to deliver, support issues (and a stain on your reputaAon)


Challenges -‐ Business

•  RestricAons by app store •  Shising App Stores policies •  Privacy •  Security •  PCI compliance •  Open source risk management •  Rapidly changing trends and

demographics •  Provenance / Copyright •  IP risks •  IP ownership


Intellectual Property •  Intellectual Property

–  You assign all rights, e.g. hired gun –  You retain all rights –  You license

•  exclusive, non-exclusive •  source code and/or binary •  Indemnification against infringement

•  Splitting IP Ownership –  Code versus content –  Indemnification considerations

•  Open Source –  Exposure to IP claims –  Risk of having to make proprietary code public

•  Employment Contracts –  If doing “on the side” you may be violating your

employment contract and compromising your product IP Mobile App

Graphics/Media

Content Code

Unknowable world – assigning away IP is giving away future business opportuniAes, e.g. derivaAve works


OperaAonalizing Your Business •  If creaAng something of value with others involved -‐

good paper makes good friends/business •  Legal enAty establishment -‐ form of company,

shareholder agreement, stock opAon plan, HST number •  Bank account / paypal account / google market

account / itunes app store account / android market / RIM developer accounts / cloud service accounts – company controlled

•  Infrastructure – file shares, SCM, bug tracking, project management – company controlled – virtual / SaaS products

•  Employment contracts – IP assignment, NDA, terms for divorce

•  Insurance •  Taxes -‐ paying and collecAng and remijng •  AccounAng •  Payroll •  HST collecAon/payment •  Contracts •  Intellectual Property (IP) – patents, trade secrets •  Trademarks •  Business plan •  Roadmap


IniAal Money / Launching Base

•  Gejng first customer to pay up-‐front

•  Government programs •  University / College collaboraAons •  Personal Savings •  Friends and family •  Unpaid labour from founders •  Equity / stock opAons •  Good will •  Spouse’s paycheck •  Doing contract work in parallel


The Opportunity is Now

•  Build your network of potenAal collaborators/partners

•  Leverage your schools experts – informal discussions around their interest areas/areas of research

•  Experiment with new technologies and how you and your friends might use them

•  Government programs – summer jobs, research grants

•  Resell another companies products

•  Apply to Lead to Win


Lead to Win

•  Apply to Lead to Win (it’s free!) •  Will “fill in the details” •  Will support your efforts to grow a sustainable business •  Need to have a business idea and desire to make it a reality •  Next sessions Feb 21-23 (Days 1 to 3) , Mar 20-22 (Days 4 to 6)


Next Steps •  Lead to Win - Receiving Applications Now •  Feedback on your ideas – Lead to Win can

help •  Monthly Networking Sessions to connect

people who are looking to form teams – Lead to Win

•  Join the Ottawa Chamber of Commerce – meet some prospective customers

•  Lead to Win Mobile Stream – Interest? Send Tony a note with what you need to build your business!


Agenda



Case Study 4


About Me

[email protected] h[p://linkedin.com/in/brianrhurley h[p://twi[er.com/brianhurley h[p://slideshare.com/brianhurley h[p://purplejuncAon.com (lots of lists of useful stuff related to tools and stats) h[p://purpleforge.com

Thank You!

www.purpleforge.com [email protected]