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The Mobile App Trap

Michael Kende

The Apple App Store was seven years old as of Friday, 10 July, marking a key — and possibly critical — evolution in how we use the Internet. First, the numbers, which are truly astounding — there are now more than 1.4 million apps available, which have been downloaded more than 100 billion times. And that's just Apple. Add in Android and the other platforms, and we start talking about a new app economy, generating billions in revenues for developers from around the world.

For us, the users, apps are our current path to the increasing number of features in our smart phones and tablets, helping us from morning until night. Apps can help wake us in the morning based on our sleep cycle, pay for our coffee, navigate our way to a meeting, time our exercise, remind us to pick up some bread, and find a constellation in the night sky. Based on one survey in the US, more than 80% of online time on a mobile is spent on apps, as opposed to a browser. Even including desktop browsing, these users spend more than 50% of overall online time using mobile apps.

That's a big shift in how we use the Internet. It has generated significant benefits, but they come at a cost. Today, most apps are native to a particular mobile platform, meaning that they are developed specifically for the proprietary technical specifications of that platform. This means, in turn, that they can only be used on other platforms if they are rewritten to match those particular technical specifications.

As a result, contemplate the time and expense that might be required to switch mobile platforms. Every app must be downloaded on the new platform, and some must be paid for, again. That assumes that all apps are available on every platform, which they are not. Developers face an expense customizing their apps for each platform, and many only target one or two, limiting their addressable market.

This can, in turn, limit competition between platforms. A new platform needs to offer apps to attract users, but users look at the number of apps available before choosing a platform. In economics we call this a two-sided market — but everyone else calls it a chicken-and-egg problem.

This phenomenon is new to the Internet. Before the mobile Internet, switching computer platforms simply required installing a new or familiar browser, and web sites were developed to be accessed by all browsers regardless of platform. It turns out, however, that the old way could also be the new way, using web apps.

A web app enables developers to create websites with advanced features that can be installed on a mobile device with an icon similar to native apps. Developers can create one web app for all platforms — consumers can easily move between platforms the way they switch browsers today — and new platforms can enter and compete on more of an even ground.

The work leading to this new app environment, known as the Open Web Platform, is led by the World Wide Web Consortium. It requires Application Programming Interfaces (APIs) that match the rich functionality available to native apps, but that enable web apps to be interoperable between platforms. Examples of this new environment are already emerging and could be a new milestone in how we use the mobile Internet.

The development of web apps, and their resulting 'interoperability', has a corollary to a key feature of the Internet as a whole. During the early years of the Internet's commercialization, vendors and operators joined the open standards movement and helped unleash an unprecedented era of growth and innovation. They found value in adopting standards that promoted interoperability between products across the industry.

Under an open environment, web apps can still be sold, and companies can still create platforms, as today. Providing interoperability would reduce switching costs for consumers and lower the development cost of apps that could reach all platforms. This would increase competition between platforms, and create a larger market for app developers to target at lower cost.

As a result, interoperable web apps would help to preserve the permissionless innovation that has been a hallmark of the Internet since its creation. It would help anyone, be they in Silicon Valley or Swaziland, to turn inspiration into innovation and innovation into income in order succeed in the new Internet-enabled global marketplace. This would mark another important milestone in the development and evolution of the mobile Internet.

By Michael Kende, Chief Economist, Internet Society
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