Hotels need to be in the app game or risk losing ground to tech-forward competitors.

by Beth Kormanik

iPhone apps

You may be right if you think the apps for smartphones like the iPhone or Android are passing phases. But that doesn’t mean you can afford to sit this one out.

PhoCusWright’s senior corporate and technology analyst, Norm Rose, said the market is only growing for consumers who use smartphones, and they want to use them to make travel decisions. Rose presented his conclusions in a Webinar this week called “The iPhone and the Future of Mobile Travel Applications.” He also is co-author of PhoCusWright’s Mobile: The Next Platform for Travel.

Rose predicted that the craze over apps may last only four or five years, but they will be crucial. Hotels and other hospitality-related industries need to plan a smart mobile strategy that will bridge the near- and long-term. Part of that is cementing your mobile brand in the minds of consumers so they stay loyal to your brand in the future.

“The message for the travel industry is the mobile revolution is not just another channel,” Rose said. “Most have thought it as just another touch point, when in fact it’s a new platform. It enables different and innovative personal interaction and the information needs to be filtered in a certain way for it to be relevant.”

An instructive example of what happens when established companies fail to innovate can be seen in the rise of Expedia and Travelocity at the start of the dot-com boom.
When hotel chains failed to deliver robust Web sites with online booking capabilities, they opened the door for online travel agencies to enter the marketplace and earn the loyalty of customers. The same thing could happen with mobile apps.

In May 2009, Apple’s App Store listed more than 2,000 travel applications, making travel the fifth-largest category. When travel-related apps such as subway maps or weather forecasters are added, it rises to the No. 4 spot.

“Travel companies need to drive the development of location and situation-centric travel downloadable apps to ensure that third parties don’t emerge as new players in the travel distribution chain,” Rose said.

He cited Choice Hotels as a good example of a chain offering one application that serves multiple brands. He said it was an easy-to-use site that offers hotel options based on location. Alternative lodging options also are taking advantage of the app craze, he said, citing InnTouch Bed and Breakfast Locator and Hostel Hero.

The sheer number of smartphones in use is one reason why hotels cannot afford to cede the ground to new competitors. There are 4 billion mobile devices in use today, Rose said, and an additional 1 billion to come in the next few years. It took 100 years for land line phones to spread to more than 80 countries worldwide, he said, while their wireless descendants did it in 16.

PhoCusWright found a direct correlation between smartphone owners and frequent travelers. Its most recent consumer technology survey, released in May, showed that people who take more than four leisure trips annually are more likely to have a smartphone. Similarly, people who use social networking sites such as Facebook and Twitter also tend to be on the cutting edge of mobile technology and take an average of 4.7 trips a year.

Meeting these travelers on their own technology terms can be the key to capturing their business.

Many already are using their smartphones as travel aides. PhoCusWright’s research found that 10 percent of respondents had visited a travel-related mobile web site, while 9 percent had used their smartphones to purchase travel or make a reservation. Another 7 percent had used their phones to make changes to an existing reservation. Six percent had downloaded travel-related mobile applications, and 4 percent had used their phone as a boarding pass.

Mobile travel apps should offer three key benefits, Rose said. They should empower mobile travelers, build ancillary revenue for the travel provider, and improve travel efficiency.

For hotels, that means offering self-services such as making and changing reservations, cancellations and mobile concierge services. The mobile concierge in particular can empower travelers because they do not have to go to a certain part of the hotel or stand in a line to get the information they need. Hotels could also potentially save on personnel costs if this information is available on a mobile device. Hotels can build ancillary revenue by selling services such as spa treatments or restaurant reservations, or encouraging guests to use these outlets with coupons.

Eventually, Rose said hotels will be able to offer mobile check in and check out, and even offer a way to have secure entry to the guest room through a mobile key chain. In Japan, hotels are experimenting with having mobile devices control in-room lighting and entertainment.

“There’s no doubt in my mind mobile is here and now,” Rose said, “and the opportunity to make money around it and make the experience better for the frequent traveler is real.”

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.”

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.

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

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.”