President Obama Challenged

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By Yukari Iwatani Kane

Apple has quietly introduced a new category on its iPhone App Store, in yet another acknowledgment of a shortcoming in its otherwise successful store.

AppleAn update to Apple’s iTunes shows the top-grossing iPhone apps.

The Cupertino, Calif., company had announced at an iPod event in San Francisco earlier Wednesday that it added a Genius feature to the App Store that would make app recommendations based on those that users already have. That was meant to solve a common complaint that it’shard to find good apps in the store, which some say is cluttered with over 65,000 apps divided in just 20 categories.

Another change, which was not formally announced, adds a “Top Grossing” category in addition to existing “Top Paid” and “Top Free” categories on the store. That change responds to developer complaints that expensive apps get buried in the “Top Paid” category because that ranking is based on the number of downloads, rather than total revenue generated from distribution of a piece of software.

That’s a problem because developers need to keep apps cheap to make sure that download levels are high enough to get on the top lists, which are the most popular way of reaching users. That also gives developers less incentive to invest a lot in terms of time and money on creating higher quality apps.

If developers suspected that the lists would look different, they were right. According to the “Top Grossing” category today, the No. 1 app wasSmule’s $2.99 I Am T-Pain auto-tuning app, followed by e2ndesign’s 99-cent AppBox Pro, a set of 18 convenient app tools such as a currency converter and tip calculator, and Electronic Arts’ $7.99 Madden NFL 10 football game.

In the plain “Top Paid” category, measured by download volume, the cheaper AppBox Pro was No. 1, followed by I Am T-Pain. EA’s Madden game–the most expensive app among the three–couldn’t be found anywhere in the top 50.

Silicon Alley Insider

How did Apple iPhone and iPod Touch users discover the 1.5 billion apps they downloaded before July 14, 2009?

Mostly by browsing and searching, according to a survey of 190 users conducted by mobile advertising firm AdMob. That’s not a shock, but we were surprised to learn that 20% of respondents said they learned about new apps from ads in other apps. (Of course, it benefits AdMob, the conductor of the survey, to point this out.)

See the chart above for the rest of the break-out. Note that AdMob asked respondents to “check all that apply.”

HONG KONG, China (CNN) — Are comics made to be read on cell phones, Kindles and iPods the new pulp of pop culture?

Argentinean artist Sergio Carrera’s “The Eternal City” has gained fans around the world.

While mobile manga has become increasingly popular and lucrative in Japan, in recent months start-ups have been mushrooming around the world to bring comics and graphic novels to both loyal fans and new audiences — all in the palm of your hand.

“I wanted to break all the barriers between comics and their potential readers,” said Hermes Pique, director of Robot Comics, a company that produces and publishes comics for mobile devices.

“In a world where 60.6 percent of the population has a mobile, and where mobiles have evolved from phones to all-purpose gadgets, mobile comics seemed the best way to start.”

Apple’s App Store, a hotbed for mobile innovation, has seen an increase in applications dedicated to reading comics, many of which are also available for other mobile platforms.

Among these, several offer digitized titles from top U.S. comics publishers such as DC Comics and IDW, while Dark Horse has even launched its own series of iPhone comics.

Comic series, like their print counterparts, are usually divided into parts, which in the App Store sell from $0.99 to a few dollars or more for graphic novels. The first installment is sometimes offered as a free preview.

The mobile Kindle reader can display e-versions of graphic novels (albeit optimized for the larger-screen Kindle DX), as can other mass-market e-readers such as Barnes & Noble and Stanza.

Independent developers have also been finding ways to get comics on to handheld devices, from applications that display comics through RSS feeds to others that convert online comics for mobile reading.

If getting the comics onto these devices is one challenge, another is to improve the on-screen experience, evolving from straightforward zoom-and-scroll browsing to more sophisticated navigation.

Some readers offer panel-to-panel transitions that appear to simulate the visual movement of reading a comic book, while other companies work with the artist to optimize each panel of the story specifically for the mobile screen.

And in France, where comics and graphic novels are known as the 9th art form, 2006 Angouleme Grand Prize winner Lewis Trondheim’s “Bludzee,” produced by Ave!Comics, will launch its daily made-for-mobile “strip” on September 1, 2009 — simultaneously in 19 languages and available for iPhone, Android, Blackberry and Nokia.

So it seems that for this generation of comic artists, interface designers and content creators of all kinds, when it comes to telling stories on mobile screens, they’re spoiled for choice.

…or “So You Think You’ve Got a Million Dollar App Idea”

(this piece also appeared on Silicon Alley Insider)

As a number obsessed techie and ex-management consultant, market sizing and research were a big part of my launch preparations for Exit Strategy NYC. Since launch, I’ve received many questions from people struggling to estimate the market for their iPhone app ideas.

I’ve put together this document as a guide for entrepreneurs considering developing an app. Below, I’ve compiled some up-to-date numbers about Apple devices. I’ve also laid out a framework for estimating what kind of sales can be expected from a paid app.

The Basic Facts

• 45 million iPhone and iPod Touch devices [Apple Earnings Announcement]
• 54% of iPhone and iPod Touch users are in the US as of June 2009 [Admob Mobile Metrics Report]
• The iPhone comprises 68% of worldwide iPhone OS devices and the iPod Touch makes up the other 32% [Admob Mobile Metrics Report]
• Only 75% of users actually download apps [Pinch Media]
  • The most frequently downloaded free apps reach approximately 30% of devices [comScore]
  • The most frequently downloaded paid apps reach approximately 3% of devices [My calculations - explained later]

Right off the bat, there’s a few back of the envelope calculations to make: 54% of the 45M devices are in the US which means ~ 25M devices. The US has about 300M people.  That means about 8% of the general American population has one of these devices.

How To Use These Numbers

Combine this data with your own numbers about how large of a market your product is addressing. For Exit Strategy NYC, our addressable market consists of all subway riding New Yorkers. In 2008, there were about 5M weekday riders and about 3M Saturday riders [MTA's ridership numbers]. The Saturday number is the more relevant one as it better captures subway usage by NYC residents rather than regional commuters. Neither number counts unique riders though, and given that there are 8M residents of NYC our addressable market size is probably somewhere in between these numbers. Let’s say 6M subway riders.

New Yorkers probably skew more techie than average, so let’s assume 10% (rather than 8%) have an Apple device. Also, Exit Strategy NYC works on both iPhone and iPod Touch devices. If your app requires phone/gps/camera/internet to work well, exclude iPod Touch users from your calculations.

How many Apple device toting subway riding New Yorkers are there?  Well 6M subway riders with 10% penetration = 600,000 potential users.

“But How Many People Will Actually Buy My App!?”

Entrepreneurs are optimists by nature, and it’s tempting to think that 100% of people will buy your product. After all, your product is awesome, right? But reality is a quite different story. In fact, only about 3% of users have purchased the most popular paid apps. To determine that number, I used sales figures from one of the all time best selling paid apps, Firemint’s Flight Control game. According to Firemint’s Alexandra Peters, sales to date have been 1.4 million. As a percentage of the 45M Apple devices, this is ~ 3%.

You should expect a similar upper bound of 3% to apply to whatever market vertical you’re addressing. Of course it’s possible that your app meets some crucial compelling need and therefore achieves a higher penetration rate in your vertical. But don’t count on it — it’s equally possible that your app gets lost in the noise and can’t get traction. Flight control has held a constant spot on the top paid app list for months now. Few others have this advantage.

Realistic Unit Sales Calculations

Returning to the Exit Strategy NYC figures, we knew that if we had an effective marketing and press strategy, we could probably achieve something close to this 3% penetration figure — perhaps higher as many New Yorkers are very passionate about the subway (see? there’s that ever-present entrepreneurial optimism!). 3% of the 600,000 subway riding devices would mean 18,000 unit sales. Does this translate to $18,000 total sales? Our maximum penetration figure was based on a 99c app, but what effect would Exit Strategy NYC’s $1.99 or $2.99 price point have on total sales figures?

Factoring in price into market sizing is difficult. Based on our own informal market surveying, we estimated that the most profitable price point would be $2.99 or $1.99. Around 75% of people willing to pay 99c would also pay $1.99 or $2.99. So 75% of 18,000 units at those prices works out to an ballpark range of around $27k – $40k. Like all software, the app’s unit costs are zero, it’s important to focus on maximizing dollar sales rather than unit sales.

A Growing Platform

One thing to remember is that the user base for apps is growing by leaps and bounds. In their latest quarter, Apple sold 5 million iPhones and 3 million iPod Touches. This means that the potential market for an app grew by more than 20% in only 3 months!

Non-Apple Platforms

One last thing to note: The iPhone certainly dominates headlines, but it’s not the only game in town. In fact, Blackberry outsells the iPhone every day. And in a town dominated by Wall Street, it seems like everyone and their mother owns a Blackberry. Realizing this, we carefully designed Exit Strategy NYC to be easily portable across different mobile platforms. Our app is available for iPhone, iPod Touch, Blackberry Bold, Curve, and Storm, Android Phones, and even as an e-book on Amazon Kindle.  Combined, the Exit Strategy App reaches a significant portion of New Yorkers.

But are device sales a good indicator of a platform’s expected app sales?

According to AdMob, there are many similarities between iPhone and iPod touch users in the US, especially in the demographic makeup of each group in areas such as age and household income. iPhone users are generally older. 69% of iPod touch users are between 13-24 years of age, while this same age segment represents just 26% of iPhone users. 31% of iPhone users are 35-49 years old, while only 12% of iPod touch users fall in this age segment. In total, 74% of iPhone users are over the age of 25, compared to 31% of iPod touch users.

The research also found that 5 in 10 consumers on both iPhone and iPod touch devices use the mobile Web more frequently than they read printed newspapers. More than 40% reported using the Internet on their mobile device more often than using the Internet from their computers or listening to the radio.

Loftlon Worth, vice president, comScore, concludes that “… (it is) important for marketers to understand the mobile landscape and the characteristics of the users of a particular platform or mobile device.. ”

Additional findings from the study:

• More than 70% of users on both the iPhone and iPod touch are male
• 78% of iPhone users have an annual household income of at least $65,000, compared to only 66% of iPod touch users with much less
• 46% of iPhone users have children, compared to only 28% of iPod touch users

In the next six months:

• 57% of iPhone users plan to purchase clothing, 47%, entertainment and 45%, travel
• 61% of iPod Touch users plan to purchase clothing, 53%, entertainment and 36%, cell phones

The total sample size of iPod touch participants is 3,848, while the total number of participants in the iPhone sample is 3,454. All results were tested for statistically significant differences at the 95% confidence level.

For additional information, please go here.

NYT iPhone App

In its ongoing quest to save itself from financial peril, it was reported Thursday that The New York Times is considering charging a monthly fee of $5 for online access to the paper. It sent out a survey to subscribers asking if they’d be willing to pay $2.50 a month, or a 50% discount for existing customers, to access NYTimes.com.

The newspaper previously experimented with charging for online content several years ago via its Times Select service, which put its columnists behind a pay wall and brought in about $10 million a year before being abandoned in 2007. Its Times Reader software offers an offline electronic version of the paper and is free to print subscribers but otherwise costs $14.95 a month.

What about The Times iPhone app? Free. That’s not surprising given that most iPhone apps are distributed free, and ad-supported like the Times‘ app, or simply as a promotional vehicle. But the App Store provides another digital platform for the newspaper to test new payment models if that’s the direction it’s headed.

USA Today Publisher David Hunke last month told the AP that he regrets the newspaper didn’t start by charging for it’s iPhone app. Like The Times and all other newspapers, USA Today is struggling with how to make up for rapidly declining print revenue. Hunke didn’t specify how many downloads the USA Today app has had, but added, “I’m not sure we realized what we had,” he said. “I think that’s a value readers will be willing to pay for.”

Interestingly, the App Store offers both USA Today and New York Times branded crossword puzzle apps, at $4.99 and $5.99 respectively. USA Today also offers a separate puzzle game for 99 cents. It wouldn’t be surprising to see The Times use that as a starting point to sell other types of specialized content, like an app version of Times Select or other material not offered in the free edition.

Unlike the Web, the App Store and other mobile storefronts aren’t places where people are expecting everything to be free. So getting consumers to start paying for apps might not be as hard as convincing them to pay $5 a month for the Times online.

by Steve Smith , Thursday, July 9, 2009

There are a handful of media types that seem to be struggling mightily to find their proper mobile form. Intuitively, we know that formats like radio, podcasting, short-form video, and even books and magazines should map well against the portability of mobile and the enlarging, lush palette of the smart phone screen. Watching each of these media experiment with different modes of delivery and presentation is one of the unique joys of being involved in the early stages of a new technology.

In the early years of film, this sort of experimentation went on at Thomas Edison’s makeshift Black Maria movie studio in New Jersey. A decade before television became the defining post-WWII medium, CBS maintained an experimental TV broadcast schedule and lab in New York, where veteran entertainers tried to understand what kinds of information and entertainment really worked best here.

The Internet was among the first technologies that made the experimental stage very public. Watching companies and their new media ideas rise and fall was itself part of the drama of the new medium. In mobile, where the mobile Web and applications lower the barriers to entry, we are seeing a similar process work out. Sure, companies are throwing some serious money at mobile now, but in 20 years we will look back at these efforts as antediluvian. Just as no one imagined Google in 1995, the true forms of mobile media likely have not revealed themselves yet.

It is true that every new medium requires its own discrete forms of content. Throwing the Web, or TV or gaming as we know it, at phones, and expecting users to respond, is a necessary but doomed approach. When you have a hammer, everything looks like a nail. But it is just as true that emerging platforms also tend to reach back historically to retrieve even older formats to try on the new technology. Interestingly, when TV did blossom in the late 40s and early 50’s, one of its most popular formats, comedy variety, revived the conceits of vaudeville.

For entirely selfish reasons, I am rooting for the comics to enjoy a renaissance on mobile. The static but sequential art of the classic comic strip or the more modern graphic novel seems to be naturally suited to a smart phone, and companies like UClick and Genus are playing with the format across apps and Web. In many cases a single frame of comic art on an iPhone or G1 is as large or larger than it appears in its original printed format.

As we have already seen with high recall and click-through rates on mobile ads, the mobile screen focuses attention in a way that a larger, more cluttered screen does not. When I look at Will Eisner’s “A Contract with God” on Genus’s Kamikaze mobile player, I am zeroing in on the line work in a new way. Jeff Smith’s “Bone” series of graphic novels are being sold an issue at a time in the App Store, and they demonstrate how entertaining a frame-by-frame flip-through can be. Smith often has his characters talk at each other across the frame. Flipping frame to frame heightens the sequencing effect of a strip and even the surprise of the punch line more effectively than its usual presentation in a newspaper or even online. The comics exercise an economy of storytelling that seems perfect for the needs of the mobile medium.

On the mobile Web, UClick has a repository of its many licenses at GoComincs.com, from “Doonesbury” to classic “Krazy Kat.” This comics portal demonstrates unwittingly why the application format may work best for mobile comics. Every strip in the library is a bit different, and getting the frames to fill the screen is a frustrating exercise in zooming, pinching and swiping. Too often the zoomed art is poorly resolved, which ruins the real impact of the line art filling the screen. Wisely, UClick is launching a ton of comics apps where the experience is much better, but we still wait for a flexible reader that can pull in diverse kinds of art. I want my Chester Gould “Dick Tracy” and Windsor McKay “Dreams of a Rarebit Fiend” available in a single pipeline of great comics I can enjoy and share anywhere.

Arguably, the most artfully designed graphic novels do not shoehorn well into the phone format, because the artists use the entire page rather than traditional frames to communicate. Genus is trying to split the difference in a reader that can present the full page and then zoom into key sections. Other developers are using the Ken Burns pan-and-zoom effect to bring us through a graphic novel. DC Comics translated the entire 12-issue “Watchmen” comics into “motion comics” that rejiggered the frames for mobile animation and added voice narration. I found them captivating, if not a real replacement for the original experience.

Ultimately, we want to see whether the audience and the medium can support comics made expressly for mobile. The frame-by-frame presentation, the multimedia layers, and the timing a mobile platform allows arguably could inspire a different kind of strip. A mobile comic might not be a strip at all. It could be a continuous linear flow that the artist adds to each day or week. Obviously, the one-panel comic is perfect for mobile, but why not add sound and a touch of animation? One company, Ringtales, has been doing this for The New Yorker cartoon for a while.

As I started by saying, my interest in promoting mobile comics is entirely selfish. I am a shameless devotee of the art (note my email address) because I think marrying art and language is uniquely powerful. That is precisely why I think mobile marketers miss a tremendous opportunity to learn from the format. If mobile ad creatives want to understand what is possible on handsets in terms of leveraging art, the frame, timing, story arc, etc., they could do worse than to study the comic strip as it evolves here.

Why is a “landing page” a “landing page?” Shouldn’t it be a launch pad to a story arc that makes best use of the display, the screen resolution, the user focus of the mobile experience? Why would you want to have your audience lean back to watch a clip, when they could lean in to interact with a visual story? Are photographs really the best way to convey information or involve the user in all cases?

There may well be an art of mobile storytelling available to marketers, and the odds are that experiments like mobile comics will scout that territory more effectively than simply waiting for the mobile banner ad to evolve.

JUNE 9, 2009

Look!

Applications for mobile devices date back to the 1990s, when Palm—by far the largest PDA player at the time—built an open platform that developers soon filled with thousands of applications. Users downloaded applications to PCs and synchronized them with their PDAs.

Enter the Apple App Store in July 2008.

“Apple did not invent either the model of aftermarket applications or the notion of building a store to house them,” says Noah Elkin, eMarketer senior analyst and author of the new report, Mobile Applications: Moving Beyond Apple, “but it did succeed in radically improving an existing idea.”

Excitement over the iPhone and App Store transformed these functional utilities into full-blown consumer experiences. Apple and others in its wake have jolted the mobile advertising market and are paving the way for paid branded applications.

As a result of rising smartphone popularity, eMarketer projects that mobile Internet access will see significant gains over the next five years, with the number of mobile Internet users reaching 134 million in 2013.

Global economic forces are taking their toll on the mobile device market, but smartphones have been spared the ravages of the economic downturn.

Even in the face of a worldwide recession, the International Data Corporation (IDC) expects smartphone shipments to grow by 3.4% this year, and expand at triple the rate of feature phones in 2010.

This sales growth will dramatically reshape the device market. By 2013, Informa predicts smartphones will make up 38% of all handset sales worldwide, more than double their share in 2009.

“As integrated devices grow more sophisticated in functionality and more accessible in price, consumers are responding by upgrading their handsets,” says Mr. Elkin. “And once they have experienced the mobile Internet through improved browsers or installed applications, they appear unwilling to let it go.”

The size of the mobile applications market is something of a moving target, given how quickly app stores are proliferating and their catalogs growing. Piper Jaffray, one of few organizations to project the extent of the growth, estimates that combined spending on consumer and business mobile applications will top $13 billion worldwide by 2012, a nearly fivefold increase over 2009.

“It is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Mr. Elkin. “In both cases, the essential challenge remains: to understand consumer behavior and craft experiences that not only resonate with a target audience but also integrate with other channels.”