"As of this writing, there's no contest: ship mobile apps if you can afford it."
– Jakob Nielsen, Mobile Sites vs. Apps: The Coming Strategy Shift, February 13, 2012
"If you can afford it." Ay, there's the rub. Jakob Nielsen is the master of usability. When it comes to the mobile app development business, who will be the master of profitabilty?
At Handshake Media, we're attempting to be. We have a mobile division and a portfolio of mobile apps developed over two years. Two of our apps are products offered directly for sale to consumers. One is the Minimum Viable Product (MVP) version of a larger decision-support software platform we're developing. Our other apps are versions of the Handshake App for our corporate clients.
We developed our first mobile app in-house at our own expense in 2010. Curious about the market value of our efforts, I did research in November, 2010, asking How Much Does a Mobile App Cost? Based on that research, I concluded, "A mobile application that took 500 hours to develop at $100 per hour would cost $50,000." Deducting our learning curve time, that's a good estimate of what we would have billed a client for that first app.
"Mobile app development" is mobile software application development, i.e. it requires the writing of lines of code, line after line after line, by a programmer with the hard-won know-how to write those lines. And that's only part of the process of taking an idea to Store or Market. Every step, from design (our mobile app design infographic shows even that step has steps), to coding, to testing, to uploading for distribution takes human labor and human time. Kent Nguyen writes, "Dear business people, an iOS app actually takes a lot of work!" And that work costs. Whether a company has a paying client or start-up founders are paying with hope, somebody's paying.
It's not consumers. They want their apps for free.
Yet we keep hearing statements like these from a ReadWriteMobile post: "The fact of the matter is that there will be money to be made by some smart entrepreneurs looking to make some great apps in the near future. Developers, it is time to cast your net. Working across both iOS and Android, there is a decent living to be made writing mobile applications."
And we read reports like this like this one from Flurry in January of 2012, that people are spending more time with mobile apps.
But CNN cites Flurry's report and points out that the data has other meanings: "What's driving the growth in time spent in mobile apps? According to Flurry, consumers are using their apps more frequently. That is, the number of daily sessions is growing, although the duration of those sessions is not."
And USA Today reports on a Pew Research Center survey: "Of smartphone owners, 68% open only five or fewer apps at least once a week…Seventeen percent don't use any apps. About 42% of all U.S. adults have phones with apps, Pew estimates…[Anindya Datta, founder of Mobilewalla, estimates] 80% to 90% of apps are eventually deleted."
So, let me see if I've got the current mobile app development business model: Create complex products with high labor costs that are time-intensive to build – of which hundreds of thousands of similar products already exist – for a market that is growing but expects the products for free. If kept at all, the product may be used often, but briefly. However, that market, upon acquiring the free product, abandons it 80% to 90% of the time.
How do businesses make money? They create products that enough of the market needs and wants - and is willing to pay for – to generate revenue and profit to fund business operations and growth.
How do mobile app development companies make money? If the consumer market won't pay for apps, but wants them, are businesses and organizations then the market? Businesses would pay mobile app development companies to make apps for them which the businesses, in turn, would offer for free to their customers or potential customers, hoping that, like a free, logo-imprinted t-shirt, the mobile app will generate brand recognition and loyalty and a later product or service purchase?
Jakob Nielsen advises, "Ship mobile apps if you can afford it." How many mobile tchotchkes can a business afford? What's the ROI of mobile swag? Will mobile apps as the equivalent of logo-imprinted promotional items result in the mastery of profitability?
I don't have the answers, but I'm in the business of finding out.