Revenue from apps

As you can see from the chart only 3% of mobile app developers are making more than $100k per month/$1.2m per year. Assuming the same power law applies as monthly revenues scale further it’s a fair guess that only 3% of that 3%, i.e. 0.1%, are making $1m+ per month or $12m+ per year. That’s one in a thousand making enough to be interesting as a VC backed startup. Not great odds.
And it’s getting worse. The latest news is that app downloads are decreasing. The average Brit has downloaded 1.8 apps to their phone, down from 2.3 a year ago and 31% of smartphone owners have no third party apps on their phone at all (up from 20% last year).
The trends show that developers are still increasingly favouring apps over web technologies, but I’m thinking that might change soon. Maybe it will become easier to make money on the mobile web than from apps. It doesn’t seem like that’s a high bar
.”
Nic Brisbourne on The Equity Kicker.

The thing that I like about this chart is that it shows the long-tail concept as it relates to apps. And as Nic states, it’s only one in a thousand that are of interest to Venture Capitalists. To be of any interest to organisations the size of most CSPs, it’s probably less than one in a million.

But the part that should be of interest to CSPs is being able to provide the infrastructure to ALL app developers and profit from all of them, not just trying to identify the needle in a haystack one-in-a-million profitable app. The same applies to content – providing the tools for all, not just identifying the one-in-a-million virally profitable content.

Furthermore, Nic discusses the tipping point between apps and mobile web. (BTW. This link on Kony.com provides a nice infographic of the relative strengths and weaknesses of HTML5 vs native apps).

I believe the question for CSPs to be asking is how to provide the tools, the OSS, the billing, the user interfaces, the analytics, perhaps even the services, to extend the long tail of the mobile web rather than allowing other hosted providers to skim off this value from the top of commoditised data centre services offered by CSPs and DC providers.

We’ll discuss the dichotomies of the CAPEX-intensive CSP/DC business models compared with application and content OTT (Over the Top) providers tomorrow. It’s interesting that CSPs are going from one capital-intensive model (wide area network infrastructure) to another (data centre infrastructure).

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One thought on “Revenue from apps

  1. Hi Ryan,
    A very relevant post – as a minimum what you’re suggesting would imply deep involvement with the key deployment & containerisation technologies across not just the virtualisation domain but also into the DevOps area, potentially including tools like Jenkins, Docker, Hadoop etc? The pricing and rating implications are not so simple – as per our discussions recently regarding AWS products. Are you aware of any efforts by the various standards bodies to address this particular area?

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