Mobility

Why most businesses are missing the point when it comes to making money on mobile

Are apps dead? Maybe, but that's the wrong question to ask when it comes to your company's mobile strategy.

App Annie recently released its newest report, showcasing 22% increases in consumer spending on apps over the past year. Apps are huge, right? Well, yes, but that's probably the wrong way to think of it.

As Google's Alex Russell has highlighted, "It's really, really important for decision makers to see through this sort of gross-revenue-in-all-categories-and-payment-types smokescreen," because, as he told me, rather than reflecting widespread health in native apps, it really suggests "the centralizing/concentrating effect of native apps into a few, ever-more-heavily-used-and-downloaded meta-experiences" like Facebook.

Yet, this isn't really the point.

The web brigade will endlessly rage against the native app fanboys, but neither side is right. Or wrong. The point isn't how to make an app, but rather how to make money with the app—and that's very much an "all of the above" sort of strategy.

But first, the data

Native apps are either booming, or declining, or both, depending on whose data you trust. For example, Appfigures has shown that while the number of newly-released Android apps is still climbing, iOS apps are in retreat:

02-04-new-apps-released-by-year2x-1.png

SEE: Mobile app development policy (Tech Pro Research)

While some of this comes down to Apple cleaning out a lot of the crap apps (clones and such), as well as eliminating apps that couldn't make the jump from 32-bit to 64-bit, it also reflects a real decline. This isn't helped by AppFigures' other zinger that more iOS apps are being ported to Android than the reverse:

05-number-of-ported-apps2x-2.png

However, look at App Annie's data, by contrast, and apps look strong, whether iOS or Android. To wit, App Annie pegs app downloads at 27.5 billion, a 10% increase over the previous year. As for money spent on apps, that number was even more impressive, growing 22% year over year:

insights-q1-2018-combined-consumer-spend.jpg

Before you get too excited by app dominance, luminaries in the web crowd suggest taking a closer look. Calling app install numbers into question, for example, Russell pointed out on Twitter that "In [emerging markets], on low-end devices, many users install/use/uninstall apps on a loop [as] space is at a premium on MANY devices." Also on Twitter, Begin co-founder Brian Leroux piled on, suggesting that so-called "native" apps actually aren't as much as 20% of the total apps are actually webviews embedded in native wrappers.

They may be right. But it still doesn't matter.

The money isn't *in* the app

In Q1 2018, Android and iOS apps combined to generate $18.4 billion. That's a lot of people shoveling a lot of money to buy a lot of apps, right? It is, but it's also a rounding error compared to how much money is now being generated through apps.

No one pays for the Uber app, for example, but millions of people spend billions of dollars on Uber rides, called by the app. Similarly, I don't pay for the Nordstrom app but I just bought a shirt using the app last week. Hotels? I book tens of thousands of dollars in hotel bookings through the Marriott app each year.

SEE: Google Fuchsia is not Linux: So, what is it and who will use it? (ZDNet)

If we're fixated on "the app economy" as "people buying apps," we've completely missed the point. It's not about apps, and it's not about buying apps. It's about an ever-increasing percentage of business being generated or influenced by mobile apps, mobile web, and hybrids of the two.

At Adobe, 75% of all online transactions go through its Experience Cloud, giving it a good view into how money is spent. A significant majority of Adobe's customer traffic is now mobile in nature, whether app or web, reflecting an industry shift to mobile.

Are mobile apps dead? Maybe. Maybe not. It depends on how you read the data. It also doesn't matter. What does matter is that every business that deals with consumers must now figure out how to engage with customers in a mobile context. Whether that's app or web or a combination of the two depends on the business. But it's no longer an app-only discussion.

Also see

mobiledevs.jpg
Image: iStockphoto/gorodenkoff

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

Editor's Picks

Free Newsletters, In your Inbox