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ToonsWare
Apr 23

April 23rd 2009 by Mark Walsh
The iPhone once again helped power AT&T’s earnings. While the telecom giant’s first-quarter net income fell 9%, the company managed to beat analysts’ expectations on the strength of its wireless business and the Apple device in particular. AT&T activated 1.6 million new iPhone accounts during the quarter and added 1.2 net new wireless subscribers overall, with 75% signing long-term contracts. The influx of new customers amid the economic downturn helped AT&T report net income of $3.2 billion, or 53 cents a share — down from $3.52 billion, or 57 cents a share, a year ago. Revenue fell slightly to $30.6 billion.

The company’s wireless division had a 13% profit increase and a 9% gain in revenue. The key for AT&T with the iPhone, and other smartphone, is boosting revenue from services other than phone calls like messaging and Web access. To that end, AT&T increased mobile data revenue in the quarter 38.6% to $3.2 billion. And nearly one-third of its 61 million contract customers now own “integrated” devices.

The continued slide in AT&T’s wireline business, with revenue dropping 5.4%, was offset by gains in its high-speed Internet and television services. It added 359,000 Internet connections — up from the fourth quarter — and 284,000 subscribers to its U-Verse TV offering.

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Apr 17

Elizabeth Woyke, 04.17.09, 6:00 PM ET

 

As the iPhone App Store swells to more than 30,000 applications, mobile app analytics firm Flurry has some advice for iPhone developers: treat applications like songs.

Like a song, a standout mobile app needs a good artist, a good producer, a strong distributor and plenty of promotion, says Flurry President and Chief Executive Simon Khalaf.

On the iPhone, Apple ably fills the role of distributor. The developer is, of course, the artist. The other two roles–production and promotion–often get skipped as an app rushes to market. But Khalaf argues that expert guidance from firms like Flurry can make or break an app, much the way a seasoned A&R team guides the launch of a new musical act. The payoff is potentially huge. Khalaf says a developer with two best-selling apps can make as much as $10 million to $15 million over the life of the apps if they are well-marketed.

There are plenty of start-ups focused on making iPhone apps pay. Flurry differs from others in a few key ways. A former developer itself, it is smaller than rivals like AdMob and Pinch Media. Unlike those two firms, Flurry does not connect developers with advertisers. Instead, it focuses on “deep analytics” for apps. Khalaf, who likens the firm to a Google Analytics or Omniture for mobile content, says, “We enable developers to build better apps by helping them understand how people are using them.”

So far, about 5,000 developers, representing 3,000 apps and several mobile platforms (iPhone, Google Android, BlackBerry and JavaME) have signed on. Flurry’s main focus is the iPhone, as most of the applications it supports (about 72%) are iPhone-related. (See “Gaming Apple’s App Store.”)

Like songs on iTunes, sales in the App Store are hit-driven. Rapid turnover–around 130 new apps a day–means the average iPhone app or game sells strongly for just three months, often peaking four to six weeks after launch.

Flurry’s job is to push that abbreviated “sales curve” up and out with its software, which is free and embeds easily into existing applications. “People mistakenly think of the App Store as a marketing machine because it’s a virtual store,” says Khalaf. “But just like in a store, consumers get fatigued and lose interest.”

Reaching out to consumers is one way to increase sales. Flurry helps by telling developers when to contact their users to yield the best results. The developer of a free game could program a message to pop up at a certain point that would encourage players to purchase one of its paid games. Flurry’s software assists by tracking when most users stop playing a particular game–on level 5 in a 10-level game, for instance. Developers can use that information to serve up an invitation at the appropriate moment. Flurry says some developers, including a videogame publisher with a casual puzzle game, have already adopted this tactic. Flurry estimates that a well-timed invitation could increase weekly revenue for a particular app by as much as 40%.

Developers with only one app could use the same tactics to promote other people’s apps, for mutual benefit. In June, Flurry plans to add a feature to its service called AppCircle that would launch a menu of agreed-upon apps within the original app for this purpose.

Established publishers like ngmoco, Digital Chocolate and Gameloft do these kinds of cross promotions already. But small and mid-sized developers traditionally haven’t had the resources to do this. Flurry also plans to provide its developers with additional data, such as which apps garner the most interest from users, even if they ultimately don’t purchase them.

Flurry’s second rule for success: get as many users as possible to rate and review apps. Currently, iPhone users are prompted to do so (by the App Store) only if they are deleting an app from their handsets. Peter Farago, Flurry’s vice president of marketing, says developers should solicit feedback well before that point. Even a negative review, he says, is better than no review, reasoning, “You want to seem popular.” (Another Flurry observation: most apps in the App Store are rated, overall, three out of five stars, with paid apps garnering slightly higher ratings than free apps.) Similar to the games invitation, Flurry’s software will be able to help developers pinpoint the optimal time to ask users to write a review. The idea is to catch them in a good mood–after they finish a game level or complete a scheduled task, for instance.

Under the same philosophy–that getting noticed is the most important step–Flurry also plans to support viral invitations by June. Farago says developers could design apps that give users points or other incentives for inviting people to download and try the same app. Or they could just build in prompts, with Flurry directing where to insert them. Such tactics are rare now, but in the new, multi-tasking version of the iPhone operating system (3.0), slated for official release this summer, e-mailing friends from within an application will be easier than ever.

The iPhone’s 3.0 upgrade will also enable developers to sell subscriptions to their apps. Farago says Flurry will help developers decide whether to offer subscriptions by measuring the size and loyalty of their audiences.

Flurry plans to support all these services with its analytics data, which measures everything from the number of times consumers use an app to how long they use it, and their location (by country). Several features go deeper, tracking how users navigate apps, logging each move they make in sequence while keeping the data anonymous.

Khalaf says Flurry’s combination of data and recommended actions benefits developers (who stand to make more money), Apple (who will sell more applications) and Flurry itself (which plans to charge for data and research reports outside its basic analytics). But some of Flurry’s competitors say the firm’s service isn’t complete without some type of advertising partnership. Says Greg Yardley, co-founder of Pinch Media: “If I didn’t touch the ad world, I wouldn’t be doing my job as an analytics provider.”

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Apr 15

When it comes to the type of applications iPhone owners use most, ones for checking the weather trump games, music, news and everything else.

According to an upcoming report on smartphone usage by online market research firm Compete, 39% of iPhone users cited weather-related apps as one of the three kinds of applications they use most frequently. (The Weather Channel app specifically was cited by 13%.)

A quarter of iPhone users said Facebook’s was one of three apps they accessed most often, followed by game apps, at 20%. More than 10% pointed to music-related apps. After that, the more than 100 individual apps or types of apps cited by users fell to single-digit percentages, with most less than 2%.

In contrast to Facebook’s popularity, only 2.4% of iPhone owners said MySpace’s app was among the ones they used most often. Danielle Nohe, director of telecom and media-related research for Compete, said that gap reflects Facebook’s demographically broader user base, which overlaps more with the phone’s. “Whereas MySpace still focuses on a younger crowd.”

She added that the firm surveyed iPhone owners about which apps they used most commonly to explore usage habits beyond downloads. A recent study by Pinch Media found that only about 20% of iPhone users return to a free app after downloading it. A month later, the percentage was only 5%. The drop-off for paid apps was even steeper.

The Compete survey showed that the kinds of apps downloaded most aren’t* necessarily the ones used most often. Games and entertainment were the most popular categories of downloads cited by iPhone users, at 79% and 78%, respectively. Weather apps were third at 57%.

Data released by comScore last week showed that Tapulous’ “Tap Tap Revenge” music game has been the most downloaded iPhone app to date, with one in three users jamming with it.

Games was also the top category for all smartphone users, with 37% having downloaded game apps, followed by music at 28% and entertainment at 26%. Weather was fourth at 24%.

For a third-party advertiser, running an ad on a less flashy but more frequently used weather app might be a smarter move than going with a new gaming app that someone uses only a handful of times before it is replaced by the latest hot game.

The Compete study also found that people are seeking out apps themselves rather than choosing based on recommendations from friends and family or simply by popularity. About 60% of both iPhone and all smartphone users said they found apps on their own. “I would’ve thought that people relied more on recommendations and what’s popular, so it’s surprising to see people actually spending time to self-discover,” said Nohe.

If that’s so, it bodes well for apps that aren’t necessarily launched by prominent brands or heavily promoted. At the same time, a TV ad won’t hurt. Nohe pointed out that the Shazam (music search) and Lose It (calorie-counting) apps got a boost by being featured in iPhone commercials. They ranked among apps used most often — cited by 7% and 5% of users, respectively.

Pricing on apps for all smartphones appears to hit a barrier at $10, with more than three-quarters of purchases falling below that level. “That seems to be the price-point up to which it’s a no-brainer,” said Nohe. “After that, it becomes a purchase decision.”

Among all smartphone owners, a much larger proportion of iPhone users had downloaded free apps — 51% compared to 27%. Roughly the same gap was found comparing the iPhone to rival devices made by Research In Motion, Palm and Motorola. That disparity may change in the coming months with the launch of other device-specific app stores such as RIM’s recently opened BlackBerry App World, making more free apps available for other phones.

Compete’s initial Smartphone Intelligence report released in November found that 93% of iPhone owners had downloaded an app, compared to 66% of smartphone users generally.

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Apr 05

IS there a good way to nail down a steady income? In this economy?

Try writing a successful program for the iPhone.

Last August, Ethan Nicholas and his wife, Nicole, were having trouble making their mortgage payments. Medical bills from the birth of their younger son were piling up. After learning that his employer, Sun Microsystems, was suspending employee bonuses for the year, Mr. Nicholas considered looking for a new job and putting their house in Wake Forest, N.C., on the market.

Then he remembered reading about the guy who had made a quarter-million dollars in a hurry by writing a video game called Trism for the iPhone. “I figured if I could even make a fraction of that, we’d be able to make ends meet,” he said.

Apple iPhone with Apps

Apple iPhone with Apps

Although he had years of programming experience, Mr. Nicholas, who is 30, had never built a game in Objective-C, the coding language of the iPhone. So he searched the Internet for tips and informal guides, and used them to figure out the iPhone software development kit that Apple puts out.

Because he grew up playing shoot-em-up computer games, he decided to write an artillery game. He sketched out some graphics and bought inexpensive stock photos and audio files.

For six weeks, he worked “morning, noon and night” — by day at his job on the Java development team at Sun, and after-hours on his side project. In the evenings he would relieve his wife by caring for their two sons, sometimes coding feverishly at his computer with one hand, while the other rocked baby Gavin to sleep or held his toddler, Spencer, on his lap.

After the project was finished, Mr. Nicholas sent it to Apple for approval, quickly granted, and iShoot was released into the online Apple store on Oct. 19.

When he checked his account with Apple to see how many copies the game had sold, Mr. Nicholas’s jaw dropped: On its first day, iShoot sold enough copies at $4.99 each to net him $1,000. He and Nicole were practically “dancing in the street,” he said.

The second day, his portion of the day’s sales was about $2,000.

On the third day, the figure slid down to $50, where it hovered for the next several weeks. “That’s nothing to sneeze at, but I wondered if we could do better,” Mr. Nicholas said.

In January, he released a free version of the game with fewer features, hoping to spark sales of the paid version. It worked: iShoot Lite has been downloaded more than 2 million times, and many people have upgraded to the paid version, which now costs $2.99. On its peak day — Jan. 11 — iShoot sold nearly 17,000 copies, which meant a $35,000 day’s take for Mr. Nicholas.

“That’s when I called my boss and said, ‘We need to talk,’ ” Mr. Nicholas said. “And I quit my job.”

To people who know a thing or two about computer code, stories like his are as tantalizing as a late-night infomercial, as full of promise as an Anthony Robbins self-help book. The first iPhones came out in June 2007, but it wasn’t until July 2008 that people could buy programs built by outsiders, which were introduced in an online market — called the App Store — along with the new iPhone 3G. (The store is also open to owners of the iPod Touch, which does everything that the iPhone does except make phone calls and incur a monthly bill from AT&T.)

There are now more than 25,000 programs, or applications, in the iPhone App Store, many of them written by people like Mr. Nicholas whose modern Horatio Alger dreams revolve around a SIM card. But the chances of hitting the iPhone jackpot keep getting slimmer: the Apple store is already crowded with look-alike games and kitschy applications, and fresh inventory keeps arriving daily. Many of the simple but clever concepts that sell briskly — applications, for instance, that make the iPhone screen look like a frothing pint of beer or a koi pond — are already taken.

And for every iShoot, which earned Mr. Nicholas $800,000 in five months, “there are hundreds or thousands who put all their efforts into creating something, and it just gets ignored in the store,” said Erica Sadun, a programmer and the author of “The iPhone Developer’s Cookbook.”

The long-shot odds haven’t stopped people from stampeding to classes and conferences about writing iPhone programs. At Stanford University, an undergraduate course called Computer Science 193P: iPhone Application Programming attracted 150 students for only 50 spots when it was introduced last fall.

“It completely surpassed our expectations,” said Troy Brant, a graduate student who helped teach the course. Turnout has been equally strong this quarter, he said.

As early as the summer of 2007 — a week after the iPhone first hit the market, and long before Apple let outsiders sell software for it — Raven Zachary, a technology consultant, decided to organize an informal get-together for fans of the device. The event, held in San Francisco, drew nearly 500 people.

Since then, he said, dozens of similar conferences have taken place around the world. “The concept has spread quite far and wide,” said Mr. Zachary, who boasts on his Web site that he “directed the launch of two top-20 iPhone applications,” including one for the Obama campaign. He expects the turnout at his conference this summer to be huge. “We may have to find a larger venue and hold simultaneous satellite events to accommodate attendees,” he said.

The rush to stake a claim on the iPhone is a lot like what happened in Silicon Valley in the early dot-com era, said Matt Murphy, a partner at the venture capital firm Kleiner Perkins Caufield & Byers who oversees the iFund, a $100 million investment pot reserved for iPhone applications.

“People are realizing that by developing in their garage with a couple dollars, they could be the next Facebook,” he said. “It’s still early days for mobile development, but those days are coming.”

This time, however, the scale may be smaller. While iShoot is never going to be the next Google or Facebook, it is the type of program that people with minimal expertise view as within their reach. The fact that Apple handles the financial side of the transactions makes it particularly easy for mom-and-pop developers to sell their homemade software all around the world. (Apple keeps 30 percent of the revenue from each sale and gives the rest to the developer.)

“Even if you’re not a programming guru, you can still cobble something together and potentially have great success,” said James Katz, director of the Center for Mobile Communications Studies at Rutgers University.

If there is ever an iPhone hall of fame, Mr. Nicholas’s portrait might hang next to that of Kostas Eleftheriou, a young Greek entrepreneur who lives in London. He and two friends wrote a program in seven days called iSteam, which fogs up the face of an iPhone like a bathroom mirror. They made more than $100,000 in three months.

It is little more than a party trick. When someone swipes a finger across the phone’s surface, iSteam’s pretend moisture is wiped away with a realistic-sounding squeak. When the phone is tipped on its side, droplets of condensation roll as if pulled by gravity. “It’s quite a good illusion,” Mr. Eleftheriou said. “Everyone wants to show their friends.”

The application hit the App Store in late December, and already Mr. Eleftheriou, who is 25, has decided to postpone graduate school and seek his fortune as an iPhone developer. He and his friends Vassilis Samolis and Bill Rappos, both 22, have set up a company called GreatApps and have hired two more developers.

“We don’t want to stop with iSteam,” Mr. Eleftheriou said. “Our next step is to establish ourselves as a big player in the application store.”

Both the iSteam team and Mr. Nicholas were spurred by the success of Steve Demeter, an inspiration for starry-eyed iPhone developers. Mr. Demeter, who is 30, wrote the game called Trism, which involves aligning rows of brightly colored triangles; he released it into the App Store last July and says he made $250,000 in the first two months. He immediately quit his job writing software for Wells Fargo and started his own iPhone game development company, Demiforce.

It doesn’t take much money to write these programs, Mr. Demeter said, and a larger budget doesn’t always mean more success. “Novel concepts that come out of left field are going viral,” he said. “These are the kinds of applications that will endure.”

The mobile frenzy hasn’t gone unnoticed by other major cellphone and software companies. Last week, Research in Motion opened an application store for the BlackBerry. Google recently began selling applications based on Android, its operating system for cellphones. Nokia is in the early stages of opening a store for its handsets, and Microsoft is creating a store for phones running Windows Mobile.

As for Mr. Nicholas, he has sprung for a family vacation to Washington, hired a nanny and founded a company called Naughty Bits Software to keep developing iPhone programs (so far he is the only employee). “Oh, and I bought myself a new laptop,” he said. “I figured I deserved that.”

He is in talks to adapt iShoot to systems other than the iPhone, and says that investors and big video game companies have approached him about financing his sophomore effort. He is also in full-swing inventor mode, working on a new game that he will not describe for fear that another developer might poach it.

“I’m going to milk the gold rush as long as I can,” Mr. Nicholas said. “It’d be foolish not to.”

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Apr 03

As consumers embraced mobile technologies like never before, last year the channel began to catch up with its hype. 2009 may actually be the point when advertisers start shifting to include mobile.

The Mobile Advertising and Usage report analyzes the (finally) accelerating mobile opportunities opening up for both consumers and marketers.

The true turning point for the industry was the introduction of the smartphone, heightened by Apple’s iPhone launch in mid-2007. The development of third-generation (3G) mobile phones led to better connection speeds, Wi-Fi connectivity and the rise of mobile Internet browsing.

Another critical factor was pricing plans that took the mystery out of data usage and encouraged unlimited mobile content consumption.

In light of the heightened activity and interest, eMarketer forecasts that advertisers will spend $3.3 billion on mobile advertising in 2013, up from $648 million in 2008.

US Mobile Advertising Spending, 2008-2013 (millions and % change)

Mobile Advertising and Usage

Mobile Advertising and Usage

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