App Marketing Conversations: Celebrating 5 years of the App Store

5 years. Hard to believe it’s been that long since the app store was released (this week’s the 5 year anniversary). In 5 short years we’ve seen:

• 50 Billion downloads from the iTunes app store
• Over $10 Billion in payouts to app developers
• Over a million apps created

And that’s just the beginning of the ridiculous stats we could talk about. This week we took a long look at the past 5 years, talked about some of the most impressive/amazing stats and then talked about what we think the next 5 years have to offer. Have thoughts on this? Please share in the comments.

The Transcript: 

Robi: Hello, and welcome. It’s been a little while. Welcome back to App
Marketing Conversations. I’m here with Ryan Morel from GameHouse and Ian
Sefferman of MobileDevHQ. I’m Robi Ganguly from Apptentive. A lot has
happened in the past month or so since we did the last one, but what’s
coming up tomorrow is actually the fifth anniversary of the App Store. I
thought we’d spend a little bit of time talking about what that means, what
we’ve seen over the past five years, and what we can expect in the next
five.So let’s see. What’s the most impressive stat? Is it the number of
downloads? Apple announced a little while ago the 50 billionth
download happened. Android, they haven’t really officially
announced it, but it was projected it happened a couple weeks
ago as well. So we’ve seen a hundred billion app downloads.Or is it the number of devices out there or something else? What do
you think, Ian?

Ian: To me, the most impressive stat is the number of stats that are
impressive. There’s the number of downloads. There’s the number
of handsets. If you start to look at like amount of revenue in
the app ecosystem, you’ve got tens of billions in advertising.
You’ve got tens of billions have been paid out by Apple.
Probably five, ten billion paid out by Google. Like every
statistic that you look at is impressive.

Robi: Yeah.

Ian: That whole picture is just incredible to think about, that that
happened in five years.

Robi: What about you?

Ryan: Yeah. So I think actually the most impressive is the velocity of App
Store revenue, which seems to be going straight up despite the
fact that handset sales are growing relatively linearly, and
that they’re not out of triple-digit growth. I was looking at
some of the math, and I think less than a year ago it was $5
billion paid out, and now it’s $10 billion paid out. That’s
pretty amazing. People are just spending more, and maybe that’s
a testament to how good and how smart app developers and
marketers have become about how to monetize their content. But
that’s what’s most amazing to me, and how much bigger can it
get?

Ian: That’s cool, and I think that that leads into one of the other
amazing statistics, which is time spent on mobile devices. It’s
just incredible the amount of time people are spending,
consumers in apps. It’s insane.

Ryan: Yeah.

Robi: Yeah. It’s now second only to television. From five years ago, when
apps on your smartphone were little Java applets that broke most
of the time and looked horrible, to today we now have almost as
much time spent with apps as we do watching television, which
has been around for 60 plus years and is in everybody’s home
around the world. Wow, that’s pretty incredible.

Ian: That’s pretty cool.

Ryan: I wonder how long until that shifts entirely? Partially just because
of the amount of content, but also because television starts to
become apps. You’ve got HBO GO now, you’ve got the Pac-12
Network app, and those are all of a sudden available on Apple
TV. Pretty soon, we’re not that far away from it all flipping.
People are consuming a lot of content. I was looking at some
YouTube stats today, not today, a couple days ago, and something
like 97% of our YouTube viewers come from mobile and the mobile
app. A mobile YouTube client, that’s amazing.

Ian: Ninety what?

Ryan: 97%.

Robi: Wow.

Ian: That’s incredible.

Ryan: Yeah. I mean, who knows? YouTube and Google stats are always a little
bit fishy, so it’s hard to know exactly how right that is.
Regardless, if it’s one magnitude off, that’s fine. It’s still a
really big number.

Robi: Right.

Ian: Yeah, for sure.

Robi: And then you think about five years ago, none of the businesses we’re
involved with could have existed. Now, we’re not just the
exception. There are so many. We have competitors. There are
other people out there doing some of the things that we’re
doing. But then you have the flurries, the contagents of the
world, and you have the business for Facebook advertising on
mobile that has just apparently exploded in the past year. You
have Twitter saying their mobile ad rates were way better on
mobile than anybody expected and seem to be outperforming
Facebook. So it’s like, “Holy crap, where did all this stuff
come from?”

Ryan: Yeah.

Robi: What do you think, as an app developer, in terms of dealing with the
mess that people are facing? One thing that’s coming up a lot is
five years in the App Store, blah, blah, blah, lot’s of
activity, but it’s still hard to get to the top. App Store has
really, it’s a tough discovery problem, and you can’t get
awareness. Does that mean that you should shy away from the App
Store, or have we learned something about marketing? Do we know
what we’re doing enough now to say that, the next five years,
it’s going to accelerate for businesses getting out there and
building awareness?

Ian: Yeah. I always do the analogy to the Web. In my mind, we’re operating
in the app ecosystem at a faster pace than what we operated on
the Web, probably because we learned a lot from the Web. But
from sort of ’95 to 2000 was a gold rush. It was everybody has
to be the one place, the top of the top. That was a really
interesting time. We went through a little bit of a downfall,
and that was the crash, and then we started to actually really
understand what it took to build a business. People were
slogging for really interesting amounts of money.

I think that if you equate that to the app ecosystem, the first
five years were around, “Be the top of the charts. Be that sole
person owning it.” Now, what we’re seeing is like, “Oh, the
indie developer is having a tough time. There’s going to be a
little bit of a drawback.” And then what we’re going to see is
that people are going to then start to invest in how do you
actually build a real business around this. I think now is a
great time to be starting to invest in that, and let’s use what
we’ve learned from the Web as a way to catapult us to get
through that downfall faster.

Robi: What about you, Ryan, what do you think?

Ryan: I don’t actually remember what the original question was.

Robi: It was a long one. That was my fault. We were talking about app
marketing and the state of the world today. A lot of people are
out there complaining, being like, “Yeah, yeah, yeah, five years
in, we’re at peak capacity for apps. There are just too many.
Nobody can find anything. Marketing is a challenge, and this is
going nowhere.”

Ryan: I think the interesting thing is, and I’ve heard this talked about a
couple different times, so I’ll just say what I heard about
this. No one cares about app discovery being an issue except for
developers. The reason that’s true is because Apple doesn’t
care. Apple doesn’t care because consumers are perfectly happy
with the experience as it is. Consumers obviously have no issue
finding the content that they want, or the download . . .

Robi: Fifty billion downloads is a lot.

Ian: Fifty billion.

Ryan: Or the download numbers wouldn’t be happening. It should be becoming
clear, not only just from what Apple says, but also in practice
that the only thing Apple cares about is customer experience.
That’s it. If you believe it, but it seems to be true.

Robi: Well, their view of it, at least, right?

Ryan: Yeah, their view of it, so providing the consumers with the best
possible experience. If I was developing my own content and
marketing it, I’d be pushing that angle as hard as I could, not
only with consumers and continuously providing them with content
they like and then ways for them to share it, but also pushing
Apple on, “Hey, this is showing off your hardware. It’s
exclusive to your platform,” maybe, all the things that Apple
cares about to help you with your marketing.

The one thing that we have learned is that despite the fact that
iPhones aren’t the least expensive and they’re not the most
ubiquitous in carrier stores, they still sell the best on an
individual device basis. Maybe you can simplify it to that
experience matters most. So if you take that and put that in and
think about your content that way, it may be obvious. I don’t
know if that’s a good answer or not.

Robi: No. Well, I mean I think the thing that’s interesting about it is
that there is a lot of like solidarity around this majority
viewpoint that the discovery of a program is too hard. But I
think you’re right. That solidarity is from the people who are
having a hard time being found, not consumers. Consumers aren’t
taking the blogs. I never see anybody on my Facebook feed say,
“Man, I couldn’t find an app for shit today.”

Ryan: Right above the one Facebook app install post and right below the . .
. there is no issue with this.

Robi: Yeah. No, you’re right. I think the other thing about it that I bring
up a lot, I was at this conference talking to retailers and e-
commerce providers who were moving to mobile, and a point I made
to the audience that seemed to really resonate is, “Look if you
have an existing presence, you already have assets. Maybe you’re
a magazine. You have a magazine you print, and then you have a
website. You already have fans on Twitter and Facebook and other
people. You already have some following in different places.
Take that and move them down to your mobile app.” That’s a huge
place where the discovery problem doesn’t impact.

Holiday Inn, Holiday Inn has a website with existing traffic
that they’ve already figured out how to spend against. And now
what are they doing? They’re saying, “Oh, looks like you’re on a
mobile device. You should check out our app.” They don’t have a
distribution problem. So that seems to me like the majority case
for online businesses today who are embracing mobile. Then it
comes back to your point about the Web, except it piggybacks off
of what we’ve already learned.

Ian: Yeah, exactly.

Ryan: Well, the other interesting point that I was thinking about, there’s
a funnel approach here. One of the things that I think companies
and marketers are doing incorrectly is assuming everyone is at
the same point in the funnel regardless of where they are in the
life cycle with you. So in the Holiday Inn example, if I’ve
never stayed at the Holiday Inn and I go to the Holiday Inn
website on a mobile phone, I don’t want to see a big pop-up for
your app. I don’t want any of that. But if I’ve stayed with you
multiple times and I’m a Holiday Inn card member, now is
probably a pretty good time because I clearly engage with you,
and I’m farther down the funnel. So I think you will need to be
a little bit smarter about that. Instead of trying to push
everyone to this singular experience, think about it like a
funnel. Where do people actually fit and whether we want them to
do that way?

Robi: But I think that the beautiful thing that is implied in is that we
are already, as consumers, embracing mobile so much that there
is the notion of a funnel. We’re not all at the beginning. Five
years ago, being in the an App Store, people were like, “Why
would I download an app? I don’t understand why. Why are you
pushing me to download this thing?” Now, a bunch of us are like,
“I use this service all the time, and it’s more convenient on my
mobile device because I’m traveling. I just like to have that
discreet experience.” We’re already at that point where we
expect it as consumers for many things.

Okay. So next five years, what do we expect? We’re at 50 billion
downloads already. What’s your most outlandish expectation for
the next five years?

Ryan: I don’t even know what to say. I almost don’t have expectations,
because I think it’s all going to change really quickly. I’m not
a huge believer in the wearable tech movement at the moment, at
least shifting a majority of what people do on their phones away
from their phones, like some percentage of it. I would say it’s
pretty clear that Apple and probably Google are going to move
really strongly and quickly into home entertainment more than
they already have, console gaming, home automation, and
expanding their ecosystem so that they lock people in more than
they already are, especially with Apple. But I have no idea how
big. How much bigger can it get? Everyone has one of these at
this point. At least, and I don’t mean to sound crass with this,
at least the people that matter. Some guy in Pakistan not owning
an iPhone doesn’t really make up most app numbers. It’ just the
reality. And I’m not picking on Pakistan, it’s just . . .

Ian: Yeah. I’m not a big wearable tech guy either, although I will say
that the increase in number of devices and types of devices is
something that I think we’ll see in the next five years. There
will be a massive shift to all sorts of devices that we haven’t
thought of yet all sort of piggybacking on the app ecosystem in
general. I would actually disagree that there’s saturation in
the smartphone market already, but whether or not there’s
saturation in the smartphone market, I think that we haven’t yet
even seen the tip of the iceberg in terms of saturation and in
terms of overall app devices.

Ryan: Yeah. I think that the most interesting thing will be how they all
interact with each other now. Right now, it happens to be kind
of a relatively mediocre client services and file sharing stuff,
and that’s kind of okay. But how is your iPhone or your Nexus 4
going to interact with your iPad and Nexus 7 and your iWatch or
whatever, Pebble? What unique and different things does each app
do on those different screens, that will drive the next
iteration of acceleration, the next growth path. What do you
think?

Robi: Well, I think that the magnitude of where we are already in five
years, that there are about a billion people or so using smart
devices that are downloading apps in some form or fashion is so
phenomenal that it’s hard for us to understand the scale at
which we will be operating five years from now. What I mean by
that is people talk a lot about the Internet of things. The
Internet of things, for me, fundamentally is this idea that
there are going to be tens of billions of sensors out there
reporting on the human experience and interacting with the world
around us, and bringing us back data. I think that a billion
smartphones is like a scratch on the surface of what we’ll see
over the next five years. It will be like probably 3 to 5
billion smartphones connected to 50 billion sensors everywhere.

Ryan: Connected to the NSA.

Robi: Well, that’s clearly always been the case. I just think that we
should have known that was coming. That magnitude of all the
data that’s going to just live in our pockets, we already have
so much data living in our pockets. But now, we’re like your
home temperature, not just for like one room, but all the rooms
is connected to that thing. Then your smart device for working
out in one way, like you have smart devices on your weights at
the gym, and then you have your smart devices in your shoes when
you go running, and your smart devices with your kids as you’re
playing with them.

All that stuff is connected back to this thing and what your
experience looks like, because this is clearly the screen that
we end up looking at all the time. That, to me, it’s very hard
to predict, but I just know five years from now, we’ll look back
and be like, “Man, there’s so much information that I didn’t
have five years ago.” That’s what I expect to be amazing.

Ryan: Yeah.

Robi: Any last words?

Ian: Lots of opportunity.

Robi: Lots of opportunities. Yeah, we’re still just beginning. Be sure to
share this, like it on Facebook, subscribe to our channel, and
then check out the next installment with Ian talking about some
of the trends we’ve see in hardware and the markets overall.