App Developer Conversations: Does the Tablet Christmas Mean More Niche Markets?
In this week’s App Developer Conversations we led a conversation about the tablet Christmas and the emergence of niche markets for app developers.
We had a few key takeaways:
- Tablets are driving a massive amount of mobile use inside the home.
- The pricing data indicates you can build targeted, niche businesses specifically for tablet consumers
Also, be sure to see the other two segments from this week:
- PlacePlay talked in detail about how Facebook’s app install advertising appears to be working well
- MobileDevHQ talked about how large the app market is ($20B in 2013 seems reasonable)
Robi: Hello. Welcome to another installment of App Developer conversations.
It’s a new year; Happy New Year. Welcome back, guys. I’m here with
Ryan Morel, of PlacePlay, and Ian Sefferman, of MobileDevHQ. I’m Robi
Ganguly, of Apptentive. We’ve been gone for a couple weeks. A lot’s
happened, as usual. Christmas was blockbuster for mobile app
activations, and a whole bunch of data. I thought we would start off
by touching on what we’ve heard happened over Christmas. Importantly,
we saw from Flurry and some other people, activations on Christmas day
topped 17 million devices; just an enormous amount of people
unwrapping stuff under the Christmas tree, and saying, “Wow. I’m going
to down load some apps.”
Even more importantly, I think we’ve been talking about the Tablet
Christmas a lot. It’s like over 50% of the new devices that came
online were actually tablets. A lot of them were iPad Mini’s, Kindle
Fire, or Nexus, the 7-inch format. Let’s kick this off and talk a
little bit. Are you surprised by these numbers, Ian?
Ian: No. I think I would’ve been more surprised, but I think going into
Christmas, everybody started to expect that that was what was going to
happen. I think you were on the ball with that one. I think if you
were to have taken me back to September, and just been like, “Is that
what will happen?” I would have said, “Absolutely not.” Going into
Christmas, I felt like that was what was going to happen. It’s
astonishing that the rise of tablets, I think what’s really
interesting is the smaller form factor; the mini’s and the 7 inches
have taken off as fast as they have.
Robi: You have a mini at home, right Ryan?
Robi: Would you say that your use at home of tablets has shifted towards
the 7 inch, or are you still mixed between the iPad and . . .
Ryan: It’s my wife’s mini, so I can say that I have the iPad 3, she has the
iPad Mini. The screen on my iPad is infinitely better. That’s a
meaningful difference, but using the iPad Mini is so much better,
because it’s so much smaller, so much lighter. You can still do
everything that you could do before, but in a form factor that works
better. She would use my iPad every once and a while, but now she has
a Mini, she uses that almost exclusively. She doesn’t touch her phone
as much, she’s not touching her laptop as much, but she’s using the
Mini for everything, and it makes a lot of sense just given how
portable it is and everything you can do with it
I think the numbers felt high to me. 50 million feels like a really
big number. 17 million on Christmas feels like a really big number,
especially seeing Verizon, and AT&T combined sold 18 million
Smartphones overt the entire quarter. It’s hard to codify all of those
numbers, and go, “Is this really accurate?” Flurry clearly
Robi: That’s true. Whether it’s 10 or 17.
Robi: I think the big point is it continues to grow dramatically. More
devices are coming online, and importantly, we’ve moved from a place,
I think, where it was phone first, and the whole app ecosystem was
being driven by upgrades of phones. To now, there’s this new device
that people are purchasing just for its ability to use it on Wi-Fi for
apps. I think that’s a big distinction. As an app developer, I think
this is kind of a point where we start saying, “Wow. This ecosystem is
truly much larger than a lot of people have given us credit for.” It’s
not just the phone story anymore. This is a new way of computer.
Ryan: I think, especially for app developers, we’re not at the point where
not only are there enough devices in market, because there’s clearly a
ton of both phones and iPads, but the ability to market to certain
niche groups is getting so good that you don’t need to go within
everyone’s product strategy. You can go with, “I’m going to do the
best app possible for high school football players.” It’s likely that
70% of football players are going to have a device that can access
your content, and you can market to them specifically, which is
fantastic, especially for the small to middle-sized developers who
can’t compete with EA, Backflip, and all these other guys.
Ian: I’m really looking forward to when the market ensures we have a slew
of app developers making $100k, $2 million a year range. That would be
a meaningful change in the way that the world works.
Ryan: Actually, the first time Robi and I met; we kind of talked about this.
Up until recently, there has been no room for a single or a double.
It’s you’re either hitting a homerun or you’re striking out. We’re
almost there where you can hit a meaningful single or meaningful
double, because there’s so many devices and the marketing options are
Robi: I think we are seeing something we’ve talked about; everybody’s
talking about free-to-play. I do think that with these tablets, we are
seeing pricing differences. People are charging more for tablet apps.
If it’s a universal app, you probably default to the cheaper price;
the phone price, it’s free or $0.99, but if you’re just tablet-focused
app, we’re started to see people charging $4.99, $9.99. That, I think
leads to a lot more singles and doubles, again to your point of being
able to target a niche market and be really focused. Are you seeing
much in the way of your customers focusing their search terms and
their discovery around being tablet-only?
Ian: Yeah, it’s interesting. When you use our service, you have to make
the distinction of ‘I want to know what people see on their iPhone, or
I want to know what people see on their iPad’. There has been a
marketing increase towards people choosing iPad to see those search
results, and how their apps are ranking for the iPad. It’s certainly
still less than it is for the iPhone, but it’s grown quickly.
Robi: Are you seeing much in the energizing landscape that says higher
rates for tablet ads or different inventory?
Ryan: Not quite there yet.
Robi: Not so much?
Ryan: I think we will be there soon, but as you know, advertising is a year
or two behind; it just takes a while. Tablets open up some really good
opportunities, and they also potentially . . . given the screen real
estate, potentially reduce some of the issues with fake clicks,
accidents, and user anger around that. That’s probably going to take a
little bit of time. One thing I would say, and I think you kind of
touched on this a little bit, is that developers need to be careful
when they’re talking about focusing a niche apps and their pricing
strategy, because free-to-play doesn’t work. If you’re going after a
really small [inaudible: 07:27], you have to charge.
Robi: That’s important to expand upon. Free-to-play is generally speaking a
very large market opportunity strategy because you’re trying to get
distribution and get almost ubiquity, but if you’re going after a
niche, free-to-play is really not going to be the way to go for a lot
of the folks there.
Another detail that I saw coming out during the holiday season, and
we’re starting to see some data points around Kindle Fire adoption.
They’re touting their numbers, in terms of . . . of course, the Amazon
way of saying, “We’ve never sold more product ever than we’ve sold
with the Kindle Fire,” but other people are saying, “Wow. We’re seeing
7% web visits for tablets coming from Kindle Fire.” What do you make
Ian: I think that Amazon’s strategy is super-interesting and I want to see
it work, and it looks like it’s beginning to work. A device that’s a
good device, not necessarily the best device out there, charge less
for it and make it back up in the content. It seems like it’s starting
to take hold. That’s good. I’m all for that that competition.
Ryan: It seems to me that this is a 2-horse race between Apple and Amazon.
Despite that fact I know you have a Nexus 7 and really like it,
they’re not selling; people aren’t buying them. The Nexus 4 is
apparently a disaster sales-wise. There just is no meaningful movement
in the Android tablets outside of Amazon. You wonder if anybody . . .
and it seems like it’s pretty clear why. Amazon has distribution,
Apple has distribution; we kind of talked about this ad-nauseam. It’s
great; it’s good for app developers.
Robi: I will say that I think the iPad Mini, from a consumer perception
standpoint, has raised the overall profile of the 7-inch tablet
Ian: I think that’s totally true.
Robi: I think it brings people in saying, “I can look at the smaller
tablet,” and then they start doing price comparisons and that leads
people to discover other things. Obviously, Apple is extraordinarily
good at telling a story. They go out and tell this story about this
smaller, better, faster, and all of a sudden, people are like, “Maybe
I shouldn’t care about those things.” I don’t necessarily think
anybody else is telling that story as well. Amazon is clearly telling
the price story that’s winning.
Ian: I think you make you make a good point, that it’s good for app
developers, especially because Amazon has done such a great job,
traditionally of getting their customers to spend money. We’ve seen
that the Amazon users, the Kindle Fire users, are spending money as
much as or more than Apple users. That’s fantastic.
Ryan: They’ve got the payments worked out. Google’s kind of getting there
with the Play Store, and it’s sort of going to work, but Amazon’s
there. This is a total aside, but I saw someone’s prediction that in
2013, carriers will start going back in the distribution game, which
if you’re an app developer, stay away from that. Focus on Amazon,
Apple and Google.
Robi: If they come to you with a boatload of cash and they’re willing to do
all the work, great; but that doesn’t usually happen.
I think that sort of wraps a little bit of the recap of what happened
over Christmas. Great holiday for everybody in the app ecosystem, I
believe. Be sure to Like us. Share this with your friends. In
particular if you’re developing apps and focusing on tablets, I would
love to hear about your experiences in the comments; that would be
great. Stay tuned for the next installment of App Developer