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A mobile developer day too far

Marek Pawlowski, founder of the MEX conferenceThis article by Marek Pawlowski, founder of MEX, explores the long-term implications of the current app store race and the impact on user experience, with specific insights into Nokia’s recent Ovi developer day in London.

Handset manufacturers, network operators and software companies have for some time been falling over themselves to win over third party developers to their platforms. After attending Nokia’s less than successful Ovi Developer day in London, I couldn’t help but ponder whether this industry infighting is in their long-term interests and those of their customers?

These companies share a simple, common objective: increasing the value of their main product offering (be that handsets for Nokia, network capacity for operators or advertising for Google) by ensuring as many applications as possible are available within their eco-system, preferably exclusively. This is what drives all those developer conferences, free handsets and partnership marketing budgets.

It is hard to dispute the initial logic of this premise: customers will naturally be inclined to buy products which allow them access to the best services. Apple is the benchmark example, where the availability of iOS apps is a key selling point for the iPhone, iPod Touch and iPad. In our consumer research we are seeing increasing numbers of customers making handset and operator purchasing decisions based on the quality and economy of access they provide to specific branded services.

However, numerous companies in the mobile industry are simply trying to beat Apple’s App Store at its own game without stopping to consider if this is in their long-term strategic interests. Apple has established the targets with its app store metrics and now a long list of competitors, including Google, Nokia, Microsoft, Qualcomm, RIM, a consortium of operators backing the Wholesale Applications Community (WAC) and numerous others are caught in a race to catch up.

How many of these companies have stopped to question the metrics (e.g. number of apps, downloads and developers) they are using to measure their success? If Google’s Android Market or Nokia’s Ovi Store outgrow the number of apps in the iOS App Store, will this – ultimately – improve the bottom line for these companies and the satisfaction of their customers?

It would be fascinating to put an exact number on the amount spent by the mobile industry to support proprietary third party application development in the last 2 years alone. The ever increasing complexity and number of these developer programmes is driving billions of dollars of spending each year, across events, staffing costs, administering the app stores and partnership marketing. Some, such as Microsoft, have even started to offer direct financial incentives to developers to create third party apps for their platforms.

It raises a pertinent question: how long can so many individual companies support so many individual app stores and so many individual platforms? The economics simply do not add up. Every company, with the possible exception of Apple, is operating their app store and developer programme at a substantial loss. This cannot continue indefinitely.

We track the quarterly performance of all of the world’s major handset manufacturers with our MEX Handset Industry Insight service across a number of metrics, including market share, unit shipments and profitability. Since 2007, the combined average annual profit margin of the 5 major handset manunfacturers (Nokia, Samsung, LG, Motorola and Sony Ericsson) has fallen from 12.5% (2007), to 9.4% (2008) and further to 6.3% in 2009. In Q2 2010, it dipped yet again, reaching 5.3%. In real terms, this means the total combined profit made by these 5 companies has fallen from about USD 15.1 billion in 2007 to USD 5.8 billion in 2009.

They are caught in a negative spiral. On the one hand, they are cutting handset prices so as to grow market share and rapidly provide an attractive target audience for developers. On the other, the cost of wooing developers and supporting them is increasing.

The only mitigation comes from the resulting app store revenues, but the fact that none of them are willing to share much detail about these numbers speaks for itself: they do not come anywhere close to covering their costs. Only Apple, the most successful, has released some figures, stating a couple of months ago that in approximately 2 years of operation it had distributed USD 1 billion to its developers as part of their 70% revenue share – this translates to about USD 429m for Apple itself.

The app store concept is a means to an end: enabling deep personalisation of customers’ user experience with a range of relevant, affordable services. However, there is a strong argument that the likes of Nokia, WAC and Microsoft will fail to achieve this end by simply trying to replicate the iOS App Store. The resulting fragmentation will result in a race to the bottom, with platform providers subsidising low quality app stores in the hope of gaining enough momentum to surpass early market leaders like Google and Apple.

Soon app stores will start to undercut the currently accepted norm of a 70/30 developer revenue split in an attempt to gain short term advantage and price competition will make many of these stores even less viable to operate.

There needs to be rapid consolidation in the number of platforms and developer programmes. Companies currently pursuing the internal development of their own proprietary app store would do well to re-evaluate whether that money could be better invested in a combination of user experience enhancements to their core products and co-operative efforts to make mobile application development more accessible, lower cost and standardised.

Turning specifically to Nokia, their London developer day provided an unfortunate reminder of the many potential pitfalls facing those with ambitions of creating a successful platform and app store.

There was, from the outset, an almost apologetic tone adopted by Nokia. They spoke of the ‘tough conversations’ they had with developers a year ago and the efforts they were making to improve the Ovi Store and their developer support. As a result, the atmosphere in the room was dominated by a sense of metaphorical distance between the Nokia staff and the developer audience, despite almost every Nokia spokesperson imploring the attendees to get involved and create a community spirit for the sessions.

It was obvious Nokia failed to achieve the tone they were aiming for. This was confirmed in the conversations I had with attending developers. While intrigued by the possibilities, they seemed unconvinced Nokia could provide much to help them and even more skeptical Nokia’s Ovi Store could provide as attractive a marketplace as the iOS App Store or Android Market.

An observation: I didn’t see a single Nokia handset being used by any of the audience. Google Nexus Ones, Apple iPhones and Blackberry Bolds were the most common – although I did notice one outre individual sporting a rarely seen Sony Ericsson Aspen (Windows Mobile, Qwerty and touchscreen in a candybar format – and about as successful as it sounds…).

The session was a brutal contrast with the triumphant, self congratulatory and almost cult-like behaviour in evidence at Apple and Google developer events. While a certain amount can be attributed to geography and the native cynicism of a London audience, there was much Nokia could have done to improve the event itself.

Despite hiring a large and generally well-regarded private members club for their exclusive use, Nokia made several basic event organisation mistakes. For instance, Nokia’s UK managing director opened the session by congratulating himself on the session being ‘standing room’ only. This is a classic mistake made by event organisers focused on their own performance rather than the experience of their attendees: ‘standing room only’ may sound great when the organiser tells their boss how the event went, but for delegates it simply means you’ve failed to provide them with a seat.

As the room grew more crowded, the temperature rose and the grumbles from the audience increased. No one wants to do business in a hot and cramped environment.

Several of the developers I spoke with also felt they had been mis-sold. The invitation clearly stated: ‘There won’t be any PowerPoint presentations’, yet there were several hours of these, mainly delivered as monologues despite Nokia’s invitation for the audience to ask questions. When questions were asked, a considerable percentage of them could not be answered by Nokia’s spokespeople and were instead requested to be ‘taken off-line’.

There’s seems little point investing the not inconsiderable costs of running such an event if it fails to fulfill its promise of an open and constructive dialogue. Nokia could have saved a great deal of money and the audience could have saved a great deal of time by simply looking at the presentations online.

There were, however, some interesting statements made by the Nokia staff and – for me at least – these cast new light on the company’s long-term strategy.

The move to its cross-platform Qt application framework is accelerating. It is clear Nokia are making a major effort to simplify third party development across their range of products by adding Qt as a layer on top of Symbian and Meego. Crucially, this will include allowing developers to bundle the Qt framework with their applications, so if a user downloads a Qt app to a device which doesn’t already have Qt installed, it will be added automatically. This should help grow Qt’s footprint on the large number of Nokia Series 60 devices already in the market.

The theory, as ever, is that Qt will allow applications to be written once and ported easily to a wide range of different devices, from Series 60 candybars costing EUR 150 up to EUR 600 tablets running Meego. Nokia went to some lengths to stress that developers should no longer think about developing Symbian Apps or Meego Apps – they didn’t need to worry about the underlying OS – instead they could just code for Qt and take advantage of the platform framework. The phrase Nokia used was: “This is about apps for people.”

While this is a seductive hypothesis, developers I spoke with were unconvinced. There was a general feeling that apps advanced enough to be valuable and genuinely different would still need to be coded at the native level.

Nokia also stressed they saw Java as the primary development environment for Series 40, with mobile web and Qt reserved for Symbian and Meego. There are two major issues with this: firstly, Series 40 devices still represent the majority of the 1.2 billion Nokia devices currently in use worldwide, so the new Qt tools and support will do little to assist those targeting these devices. Secondly, it is surprising and disappointing not to see Nokia promoting mobile web development across all of its platforms, when for many developers this will provide the quickest and easiest way to roll out services to Series 40 users.

Nokia are working to reduce the costs associated with development on all of their platforms. They charge a one-off EUR 50 regsistration fee, but after that the tools are free and submitting your application for approval is free. In addition, they are committed to offering tools for PC, Mac and Linux – in addition to their web-based app wizards – to ensure you don’t need to buy new kit to start creating Nokia applications.

Starting on 9th August in the UK, there will be a TV advertising campaign to support the Ovi Store. Developers were shown a preview of the commercial, but unfortunately it provided yet more evidence of the gulf between the community spirit of iOS, Android and Nokia developers. Whereas such previews often lead to spontaneous applause and cheering at Apple and Google events, Nokia received a hesitant and subdued reaction, despite the somewhat desperate requests from the Nokia spokesperson for more support. It was let down by weak advertising creative and the overall negative atmosphere in the room caused by Nokia’s event management failings.

It is, of course, a positive for developers that Nokia is investing in this kind of marketing, but I couldn’t help but feel they are failing to capture people’s imagination.

Further evidence of this was provided by Nokia’s engagement of Marvellous, a mobile marketing agency, to ‘launch app-led campaigns which capture the social mood around the UK’. The exercise smacks of a misguided leap onto the social media bandwagon.

Nokia have Marvellous creating a series of light-hearted, short-term apps such as an ‘instant marriage’ game, which is intended to talk you through your vows with a mate when sitting at the pub. Nokia’s spokesperson emphasised they saw these kind of ‘buzzy’, fun applications as key to capturing column inches in the press and generating awareness in social media channels.

It is a waste of money and a case in point example of how easy it is for a company to become distracted from its core mission of providing useful, appealing products for their customers. It is true that devices like the iPhone have benefited from the free publicity generated by the availability of interesting applications, but this is a symptom of good user experience and a vibrant development community. Nokia have fallen into the trap of paying to recreate the desireable symptoms of their competitors rather than looking at the root cause of their rivals’ success.

Of course, Nokia will not be alone in looking back ruefully a few years hence on the wastage of such ‘social media’ nonsense campaigns – they have become de-rigeur for companies who want to be seen at the forefront of marketing practice.

Many of the developers present had come specifically to spend time with the N8, but inexplicably the demonstration of this device formed only a small part of the presentations. Everyone I spoke with also expressed disappointment that, unlike Google, Samsung and Microsoft, Nokia failed to provide attendees with a free device to start developing with. These kind of giveaways have become an expectation at developer events.

The N8 itself has several impressive characteristics. The use of good quality brushed aluminum and availability of several colour choices will be a strong selling point for many customers. The imaging capabilities, with a 12 megapixel camera and HD video recording and output are exceptional. When it hits the market, it will establish a new benchmark for music and video quality with features like Dolby 5.1 sound.

The Ovi Store has also been re-vamped in preparation for the N8. The new UI is easier to use, and has been re-written in Qt rather than web run-time, making it significantly faster and smoother.

However, weaknesses remain. The home screen is a user experience disaster. It is very cluttered and interaction flow is inconsistent.

I found it quite telling that ‘single tap’ interactions (i.e. you no longer need to click twice on an icon to open it) were cited by Nokia as a key new feature of the device. This is 2010.

There were some specific weaknesses of Nokia’s London forum (easily avoided by taking some basic classes in event management), but many of the deeper problems it revealed are shared by all those companies playing a desperate game of catch-up with the iOS App Store.

These companies must consider the following:

Debate welcome in the blog comments, by email and Twitter.

15 comments - join the debate

  1. Marek Pawlowski replied:

    This article by Marek Pawlowski, founder of MEX, explores the long-term implications of the current app store race and the impact on user experience, with specific insights into Nokia’s recent Ovi developer day in London.

    August 5th, 2010 at 2:48 pm. Permalink.

  2. Mobile Phone Development » Blog Archive » Nokia London Developer Day replied:

    [...] an interesting article by Marek Pawlowski who runs the MEX Mobile Experience conferences. He talks about the recent Nokia N8 developer day that I missed because I was on holiday. It seems I didn’t miss [...]

    August 5th, 2010 at 6:30 pm. Permalink.

  3. David Mery replied:

    Marek,

    I felt very much the same about the event. The presentations looked like they had been prepared the day before. There was no consistency in message. The mantra of ‘apps for people’ was contradicted many times: none of the three prongs of QT apps, web apps and Java apps addresses all three categories of platforms (‘S40′, ‘smartphones’ and ‘computers’); the apps of the guest speaker had obviously been developed in native code.

    The N8 demo was enough to show the mess of the home screen and how there’s a desperate need to be able to lock the auto rotation, but otherwise it too obviously avoided many features that one can only believe didn’t work: iPlayer had been talked up several times, but only its icon was shown! Applications were closed before trying to show images (and the tracker got stuck trying to refresh its index), etc.

    The presentations were content free and the promised ‘live developer workshops’ didn’t happen, but at least the breaks were a good occasion to catch up with other attendees.

    P.S. I did spot a few Nokia N900 and an iPad as well!

    August 6th, 2010 at 1:10 am. Permalink.

  4. hit or miss replied:

    >”…inexplicably the demonstration of this device formed only a small part of the presentations…”

    Is it inexplicable. Or is the sorry truth that it’s still not ready for widespread user testing and development?

    August 6th, 2010 at 9:56 am. Permalink.

  5. David Almstrom replied:

    Marek,
    could not agree with you more – this AppStore craze have to stop and as you say, how much do you need before you need to stop?

    At one point in time, it will probably move away from the AppStore paradigm as well and it would be more interesting to figure out how that would play out and become a first mover there.

    How can the AppStore be replaced and still provide consumers an easy way to access, discover and purchase content and services and provide a simple way for developers to monetize their work?

    a common comment I heard lately is that developers do not really care that much about how difficult or painful it is to code and re-code the application as long as their is a way to reach out to consumers in painless way.

    August 7th, 2010 at 7:43 pm. Permalink.

  6. tamoghno replied:

    this is what i’ve coe to expect with nokia these days , brilliant ideas but poor execution . hope nokia stops trying to do everything and start doing few things better .

    August 9th, 2010 at 6:26 pm. Permalink.

  7. John replied:

    So you are saying that creating an App store is a wrong strategy unless you are Apple or Google, way to go in creating competition

    August 9th, 2010 at 7:14 pm. Permalink.

  8. Lorion replied:

    Interesting article, but I don’t see your points.

    First of all: I wasn’t there so I cannot discuss the event, PowerPoint-Orgies doesn’t sound funny.

    Not giving away N-8s is very sad for the attendees but are you sure that you wouldn’t call it a waste of money if they did?

    “While this is a seductive hypothesis, developers I spoke with were unconvinced. There was a general feeling that apps advanced enough to be valuable and genuinely different would still need to be coded at the native level.”
    You do realise that Qt is not some kind of script language or something like Flash, right? It’s a framework and a C++ class library. How much more native do you think it has to be? Assembler?

    “Nokia have fallen into the trap of paying to recreate the desireable symptoms of their competitors rather than looking at the root cause of their rivals’ success.”
    What is the root cause of their success?

    “Long term, do you really believe your particular proprietary app store, running on your particular proprietary platform, is viable?”
    What’s the alternative? The internet is our AppStore? Sure, the masses love to crawl through google to find a fart app. Seriously, without an AppStore the platform is doomed. It’s not because Apple did it, it’s because it is the best way for users and devs to give and find Apps.

    WRT-Widgets on S40 would be nice but I don’t think that they are powerfull enough.

    “Third party developers will flock to platforms which, firstly, inspire them personally, secondly, are selling well and, thirdly, make it as simple as possible to add new features”

    I think here you are wrong. Third party developers will flock to platforms which make it possible to them to earn money. Selling well is important for them and inspiring them personally will help. But in the end they will go where the money is.

    August 10th, 2010 at 10:41 am. Permalink.

  9. Anonymous replied:

    I don’t understand why they stick with the Ovi name. They already have one of the top 5-10 brands in the world. Why try to introduce a new one nobody ever heard of, and that is an “odd” word in English. Call it the Nokia App Store and have done with it.

    August 10th, 2010 at 5:31 pm. Permalink.

  10. Alex Kerr replied:

    This is not to dismiss your opinions on the event and Nokia’s strategy, but simply to point out you tellingly make no mention of the fact that Nokia, Ovi Store, and developers developing for it, have had significant proven successes. Quite a lot of million+ sales for individual apps, a variety of big name apps which are highly popular, stories of developers making lots more money on Ovi than Android or iPhone app stores, downloads of 1.7M/day from Ovi (an out of date figure sure to be updated at Nokia World) of which 75% are apps and so on.

    I’d disagree the S^3 homescreen is cluttered. That’s merely opinion and you can’t please everyone. If that’s the case, Android’s is also cluttered. I find iPhone to be like using a Fisher Price “My First Phone” toy, overly simplistic and no functionality. These are all opinions, I think the vast majority will love the widget based approach.

    I also think that developers who ignore the Ovi Store are foolish given the vast number of customers they can reach, and unlike the Android Store, Ovi has a proven ability to make devs money. One wrongly pitched developer event does not undermine Nokia’s strategy.

    And I’m just wondering how this write up would have been if they’d had the air con on, a seat for you, and a shiny new N8 on the way out? ;-)

    August 13th, 2010 at 11:15 am. Permalink.

  11. Harsha replied:

    How much money did apple pay for writing this anti Nokia Article

    August 16th, 2010 at 4:25 am. Permalink.

  12. Marek Pawlowski replied:

    Thanks to everyone for all the comments and feedback on this.

    I’ll attempt to answer some of the specific questions and points made:

    With regards to the issues raised by David Almstrom and ‘John’ about alternatives to an app store, my view is that the current device or platform specific app store model is a temporary measure. First movers such as Apple and Google have been able to build up a reasonable base of applications specific to their platform because they have invested huge resources in doing so and have done so faster than the rest of the market. I don’t believe those who attempt to replicate their models and use their competitors’ benchmarks as their measure of success will build long-term value for their companies or their developers.

    App stores are a means to an end. I see that end as every user being able to easily access the widest range of interesting services, content and customisation options through all of their digital devices (don’t forget, this isn’t just about mobile phones – users are increasingly multi-platform in their expectations, wanting their services and content across PC, TV, tablet, phone, car etc…). For this to be sustainable, it must also enable developers to build successful businesses and, crucially, for the cost of running the app store and developer support to be sustainable.

    It is commercial folly (not to mention conducive to bad end user experience) to imagine the market can sustain a proprietary app store from every device manufacturer, network operator and chipset vendor.

    If I were in Nokia’s position, I would be looking to disrupt the existing app store model rather than replicate it. By championing browser-based applications, encouraging cross-platform development and reducing the layers of bureaucracy for developers. I would also focus on further improving discovery mechanisms and fostering an independent payments system, ultimately leading to developers being able to develop a service, upload it to a web server and start taking payments for themselves. It’s been happening for years through what we know as PCs and as the boundaries between ‘PCs’, laptops, tablets and phones continue to blur, there should be no reason why this is any different.

    The resources and expenditure Nokia and others have been wasting on building and supporting their own app stores should be re-directed into their core operations, where the return on investment is likely to be higher and easier to obtain. They would also do well to focus on making money from some of their own software and services – Nokia in particular has some very valuable software assets it is failing to monetise.

    Re: some of the specific complaints about the event itself, I should re-iterate that, personally, I had a chair, I wasn’t overwhelmed by the heat and I didn’t lose any sleep over the lack of free devices.

    However, these points were raised consistently and in the majority of conversations I had with others at the event, hence finding them noteworthy enough to report. My views, critical or otherwise, were those of an observer who got to see first hand that this event did not succeed in supporting developers as well as it could have done.

    Subsequently, after extrapolating the issues discovered at this event and comparing them with other experiences at developer events, I arrived at some conclusions about the long-term future of app store strategies.

    Further debate very welcome.

    August 16th, 2010 at 9:12 am. Permalink.

  13. Lorion replied:

    So basically you are supposing a backend-less AppStore, some kind of easy-to-maintain-Link-Database (costs around 15€/month to have it running) where developer can “post” the links to their applications. The payment could be done via PayPal or any other service the developer want to use.

    Interesting… but I think it’s not bringing the same customer satisfaction as an AppStore. Problems are: Application Updates – (I know, not yet implemented in Ovi, but Ovi is criticized for this, so the status quo doesn’t seem to be wanted.)
    “Fullversion verification”: Every developer would need to implement his own system to shield his Apps against cracking and so on. This would lead back to the good old “registration key”-era. Which was not so comfortable, but how would it be with today where we install maybe 1 App per day or week instead of 5 programms per year?

    No, I see no alternative to an AppStore for Nokia. I understand why Vodafone, Orange, LG and HTC don’t need an AppStore but everyone who has to take care for the UX within a mobile OS need to have an AppStore.

    And please bear in mind that Google makes 10$ per Android-Phone per year, without charging for Android. This is the money Nokia, who changed theirself into a software and services-company, is going for.

    But I have one thing Nokia should change: Make OVI-Store available for other hardwaremanufacturers. There is no way that there can be another AppStore for Symbian and without the infrastructure no other manufacturer would produce another Symbian-Phone.
    So make OVI available for them (Split 70-15-15), offer OVImaps there for 50$ get other manufactuerers back in the boat!

    August 16th, 2010 at 4:20 pm. Permalink.

  14. Espen Riskedal replied:

    Some comments:

    Qt is native. It’s C++. It creates a proper Symbian / MeeGo executable. It simply proviced cross-platform APIs on top of whatever system libraries are provided by the platform. For Symbian and MeeGo it is now _becoming_ the platform libraries. It can’t get more native basically.

    On the too-many-app-stores issue: Sadly the operators and phone manufacturers will not give up their control and collaborate – I think the only alternative is a community driven app-store, but even that is not going to happen unless everybody starts jailbraking their phones.

    On the native vs. HTML5 issue. HTML5 is simply not ready yet. In short it lacks, at least, two things: 1) a cross-platform widget set, a cross-platform “device” api (accessing sensors, accessing user information, sending sms, using bluetooth etc). It’s not there yet. If you use a web-runtime today, you’re just as “stuck” on your platform as with native APIs. There are many companies working on fixing this, but when talking about today native is still the way for power and flexibility.

    On Nokia and handing out devices: I don’t get it either. They ship more devices than anyone else in the world, yet it’s still pretty hard to get hit it the face with a Nokia device at a developer conference :)

    August 16th, 2010 at 10:00 pm. Permalink.

  15. The Music Void replied:

    Whilst Apple’s app store to date has so far been a resounding success, The Music Void asks what are the long-term prospects for app stores in general? As usual Apple was the first to innovate in this area.

    Read more on this here – http://www.themusicvoid.com/2010/08/what-is-the-long-term-market-viability-of-app-stores/

    August 18th, 2010 at 2:48 pm. Permalink.

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About the author
Marek Pawlowski Marek Pawlowski is the founder of MEX. Since 1995, he has focused the MEX business on helping digital industries to develop better, more profitable products through improved understanding of user behaviour with mobile devices and wireless networks. MEX is best known for its events, research and consulting, which balance commercial, technical and user insights to define the future of mobile user experience. Web http://www.pmn.co.uk/mex/ | Email mp@pmn.co.uk
Posted on
5 August 2010
Categories
Opinions, ideas and new thinking