Category: Tools

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Tools

App Industry Picks & Shovels: How to succeed with mobile developer tools

developer tools

In the great app store gold rush of the last 5 years a lot of vendors of virtual picks and shovels have set up shop, hoping to cash in on the boom regardless of which individual developers succeed in a fiercely competitive market. Having surveyed developers on their tool choices and revenues, we can see how popular these third party tools and services are. We can also reveal whether those buying the virtual picks tend to do better than those who opt for the virtual shovels, or whether you really need both developer tools.

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With great opportunity comes great complexity

As the expected level of quality and functionality in mobile apps is increasing, the monetisation strategies are also getting more complex. [tweetable]In order to succeed, most developers need advanced tools to manage quality in a world of fragmentation[/tweetable]. To optimise revenue models beyond the simple paid download, systems to acquire and analyse the behaviour of users are also essential. Most developers turn to third parties to provide some or all of these tools. Many additionally look to third parties to provide some of the functionality, particularly via scalable cloud-hosted services.

Over 85% of developers who completed this section of our survey use at least one third party tool, while just over 45% of developers use tools from at least 3 different categories. There’s clearly significant demand but how does tool adoption correlate to revenue? Looking at only those developers who generate between $1 per month and $5 million per month (i.e. excluding those not trying to make money, not yet making money and the mega-rich – n=1596) we get the following:

More developer tool use, less risk

Looking at only the mean average revenues you could be forgiven for thinking that developers should be avoiding most third party tools, since by far the wealthiest developers are those not using them. However, a look at the median revenues shows the opposite. Some of the largest and most successful developers can afford to build and control their own tools so don’t need third party offerings. [tweetable]The vast majority of developers trying to make it without any third party tooling support generate hardly any revenue at all[/tweetable]. The median number of people involved in development for the organisations not using tools is 1, whilst it is 3.5 (2-5) for all other results. In general the increasing median revenue with use of more tool categories suggests that those who use more tools have lower financial risks. It’s tempting to speculate that there’s some causation here where developers are able to offload some risk by using proven third party solutions. In fact, the major driver is that the tool categories cover such a wide spectrum of apps that the more you use the more likely you are to be doing a lot of contract development – an inherently lower risk revenue model.

It’s not what developer tools you use, it’s how you use them

How use of tools in the various categories correlates with revenues doesn’t produce any great surprises. Those using cross-promotion networks, game development tools and ad networks are at the bottom of the revenue pile. Large game developers and publishers tend to have their own game engines, can cross-promote with their own titles and even run their own ad systems. The [tweetable]smaller, independent developers who rely on third parties for this typically struggle to climb the app store charts[/tweetable]. App store analytics users are next up from the bottom, this may simply reflect the relatively poor revenues of those who rely on app stores. Most other tool use was correlated with fairly average revenues. Notably above average, ranking second overall, is Backend-as-a-Service (BaaS) – where the mean revenues are about 35% higher than average and the median revenues 50% higher. As a result those using a BaaS typically beat average revenues by significantly more than the associated costs.

Using the data from our survey at the beginning of the year, we previously argued that developers who collect lots of analytics and quality data for their apps and act on it are significantly more likely to succeed. Users of crash analytics tools had the highest mean ($26k/person/month) and median ($2.1k/person/month) revenues of any single tool category in the latest survey. Nearly 50% of respondents to this section of the survey now use usage* analytics tools so it’s unsurprising that their mean revenues are almost exactly average ($17.5k/person/month) although noteworthy that their median revenues are 50% above the average ($1.5k vs $1k). Those using both crash and usage analytics tools had similar mean revenue to those just using crash analytics but significantly higher median revenue ($3.5k). The only tool combination to beat this was crash and usage analytics plus beta testing, which had mean revenues of $33k and median revenues of $3.75k. Beta testing tools can also help developers to improve the quality and usability of their apps, as such it’s interesting that those using just crash analytics and beta testing had extremely low mean ($5k) & median ($750) revenues. Possibly this last tool combination typically signifies a developer with a quality problem rather than one proactively seeking quality?

Is selling picks and shovels where the real money is?

There are some massive app developer success stories but our data suggests that the typical app developer (as represented by median revenue) is struggling to break even. It turns out that the developer tools market is similarly competitive. Selling services to developers ranks third in mean revenue per organisation and per person involved amongst all revenue models (behind per device royalties/license fees and subscriptions). Compared to the users of the tools the mean average income at $29k/person/month is slightly higher than for users of any single tool category but the median income is exactly the same as for the tool users.

* This category gets called both “user analytics” and “usage analytics”. The developer tools do both, although if you only use them to get an idea of who your user base are and how often they use the app (user), rather than what they do in the app (usage), you’re probably doing it wrong.

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APIs Tools

Accelerating Web Apps – It’s all about politics

On desktop computers web apps have come to dominate many application categories. They are easier to develop and deploy across multiple platforms and it’s possible to iterate much faster. A very large number of developers would like to be able to apply the same technologies and techniques on mobile devices but very few are able to do so successfully, particularly for mass market consumer apps. One of the most important reasons for this is performance. Resolving this issue is much more about politics than technology.

Are mobile web apps doomed to be slow?

Back in July, Drew Crawford wrote a blog post that got a lot of attention essentially claiming that JavaScript performance on mobile devices was simply too slow for serious apps and likely to stay that way for the foreseeable future. It showed, amongst other things, that the browser on the iPhone 4S was around four times slower than the slowest browsers capable of running Google docs real-time collaboration or Google Wave back in 2010. He claimed that ARM processors were not going to get faster rapidly enough to make a difference and JavaScript runtime improvements had stalled and were unlikely to make significant progress. Technically both of these points seem to have been proven wrong already. Apple just announced the iPhone 5S, with a processor twice as fast as the iPhone 5, which was in turn twice as fast as the iPhone 4S – so we have four times more raw CPU performance than we had just two years ago, theoretically enough to support 2010 desktop class browser performance. Also, Mozilla are working on asm.js, which uses a subset of JavaScript compiled ahead of time (AOT) and promises to enable apps to run in the browser at just 1.3 times slower than native performance – almost another four times speed increase versus the current five times slower than native performance of modern JIT compilers.

In addition to being at least partly incorrect this is also looking at a very narrow area of browser performance, a point well made in Sencha’s blog post in response. Across all vendors there are key performance areas where each is 10-40 times behind another. In reality, most of the major performance issues that prevent web apps from being competitive with native apps are related to graphics performance. Mobile device users have come to expect slick animated UIs which are only enabled by GPUs on the devices rather than, say, manipulating the DOM with JavaScript. Fortunately HTML5 and CSS3 provide several opportunities for GPU accelerated graphics with e.g. Canvas, CSS animations and WebGL. So, as mobile hardware and browser software continue to improve over the next couple of years competitive web apps should be just around the corner, shouldn’t they?

Platform wars and politics

With the technologies available or on the very near horizon today, plus improvements to mobile browsers across the major platforms, there’s almost no doubt that we could have competitive web app performance. The problem is that to get there requires platform providers and OEMs to adopt the technologies and implement the improvements – it’s not necessarily in their interests to do so.

Apple and Microsoft want users locked-in while Google wants them logged-in. Mozilla wants the open web everywhere but Google funds them. Opera recently gave up on writing their own browser core and use Google’s instead. That’s over-simplifying but fairly accurate. With other browser vendors attempting to prevent the user tracking that Google’s business model depends on (through default Do Not Track settings or third party cookie blocking) the best way to ensure users stay logged-in is to get them all using Chrome. This means they’re fighting a new browser war for control of the desktop web and taking that to the bulk of the mobile market through Android. In the process they are building several browser technologies to differentiate rather than standardise (e.g. they’ll prefer their own Native Client solution to asm.js).

At the same time Apple wants a great browsing experience but wants developers to build native apps rather than cross-platform web apps. As such they adopt most new web standards quickly but are very slow to include any that might enable high performance web apps – e.g. WebGL has been implemented since iOS 4.2 but only enabled for iAd, not in the browser, also Apple has famously not enabled their JIT compiler in the WebViews used by wrapped web apps* (needed to access native APIs) slowing their JavaScript performance by almost four times. Mozilla’s asm.js seems a very unlikely candidate for Apple to adopt anytime soon. Unless their new CEO makes a major change of strategy, Microsoft seem determined to follow the Apple model, although they might need first class web apps enough to accelerate their standards adoption.

A ray of light?

While there may be several classes of app for which mobile browsers are already good enough, for those hoping to develop all apps with web technologies, the news is not all bad. Although it seems unlikely to be possible to deliver a single solution with great performance everywhere, we might not be far from being able to deliver a good level of performance almost everywhere. Although Apple appear to have some strategic performance limitations, they also have some of the fastest hardware on the market. At the other end of the spectrum good Android browsers are reaching low end smartphones and the Firefox OS, also targeted at low cost devices, has an excellent web app environment. The other good news is that while we have real competition in the mobile market, browsers should keep getting better all round. We’re unlikely to see the return to stagnation of the Internet Explorer dominated early 2000’s.

* Apple do have a good security reason for doing this but they haven’t been in a hurry to resolve it either.

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Tools

Cross-Platform Tool Trends – Freemium & Flexible

CPT trends

CPT trends

Creating versions of an app for multiple platforms (at least iOS & Android) is an increasingly common requirement. Building and maintaining native code for every platform supported is both difficult and expensive. Cross-Platform Tools (CPTs) offer a solution to this problem by enabling sharing of code across platforms and in many cases a single code base can target multiple platforms. With such significant cost savings available, why don’t all developers use CPTs?

Learning curves & licensing

Unfortunately the platform spanning magic provided by CPTs doesn’t come without any costs. Most CPT vendors depend on licensing revenue – developers have to pay to use the tools. Of course the cost of licensing most of these tools is far less than the cost of a full native port of an app to one additional platform. However, there are more costs associated with adopting a tool than the license fee; learning to use a CPT and building confidence in it’s suitability for future projects requires a significant time investment. The potential future cost of switching away from a tool that isn’t working out as hoped is also something that developers must consider.

The spread of Freemium models

In order to build sufficient confidence in a CPT to build their businesses around it, some developers need lots of time for evaluation, perhaps building a side project before risking major apps or customer projects. For many the 30 day trials that were typical in the sector just weren’t sufficient. One of the first mobile CPTs, MoSync, was very early to recognise this and had generous free options early on, they even went open source with a dual licensing model back in 2009 around the time many of their competitors were just launching. This year has seen a tipping point, possibly partly due to increased competition in the sector but also to capture a larger share of the ever growing demand for mobile development – Appcelerator, Corona, RunRev, Unity and Xamarin have all either switched to freemium models or expanded their free offering for mobile. RunRev has also joined MoSync in releasing their code under an open source license, Appcelerator have open sourced more of their code and Xamarin have just open sourced some of their cross-platform API wrappers. Having access to the code for the cross-platform layer can help remove developer fears of getting blocked by a bug in their chosen tool and being entirely dependent on the vendor for a rapid fix.

Technical tradeoffs

In many areas platforms are sufficiently different that it’s not possible to unify them under a single API. CPTs get around this in a number of different ways:

1) Not providing access to the problematic functionality – this restricts what developers can create.
2) Providing a lowest common denominator API – this prevents developers from using the full power of the native platforms.
3) Providing their own implementation of the functionality – this can bloat apps and often prevents them from having a fully native experience.
4) Providing thin wrappers or separate extensions for each platform – this gives maximum control but adds complexity to the code, reducing the benefits of a cross-platform approach.

Different apps, or even parts of apps, will have different priorities that determine which of the above approaches are acceptable. For example, a mass market consumer utility app is likely to require a completely native look and feel for the UI, while an internal app for a large enterprise may want to look and feel exactly the same on all platforms to minimise both development and staff training costs. The same tradeoffs won’t always apply to every part of an app either; most games have a completely custom UI and don’t require access to the native platform UI components at all, however, they may well want access to the new Google Play game services, or the iOS 7 Game Controller APIs as soon as they are available.

A flexible future

Faced with a still growing list of platforms to support and wide array of new features in each new platform version, CPT vendors now have to specialise for a sufficiently profitable subset of the market that has fairly narrow requirements or become increasingly flexible. Most vendors currently provide flexibility through a native interface that enables the creation of third party extensions or plugins. Xamarin’s approach to flexibility enables developers to (semi-)automatically generate wrappers for any native API or library, which is ideal for developers who want to stick with C# for all of their own code yet build on the work of native developers for each platform.

Even greater flexibility is possible though. What if you could just build the parts of an application that made sense to be cross-platform with a CPT? RunRev has a beta for an embeddable library version of their engine to enable this, although currently only for iOS. They are also re-architecting their engine to put 3rd party extensions on an equal footing with the core functionality – even allowing them to extend the language where necessary. Another interesting option going forward here is Digia’s Qt, the open source cross-platform framework that was acquired and re-purposed for mobile by Nokia before they dropped it in favour of Windows Phone. Qt is now the native framework on BlackBerry 10, Ubuntu Mobile and Sailfish OS and is close to production readiness for iOS and Android; it also has a Tizen port ahead of the release of that platform. The core of Qt being C++, it can easily interface with native code on most platforms and has always been delivered as a library, so it’s also embeddable within native apps.

Flexibility enables greater agility

This library format means that developers can start cross-platform and add or optimise parts of their app with native code later. It’s possible to just add a full native experience for the platforms that get the most traction. Alternatively, starting on a single platform and then adding new functionality that works across all platforms after achieving some success and starting to port to other platforms is also an option. Last but not least, the library format also removes any concerns about lock-in. If a developer decides to migrate away from a CPT, they can do so gradually, without having to port/re-write everything in one go. It’ll be interesting to see how many vendors can push flexibility this far and how many developers take advantage of it.

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Tools

Rise of the Mega SDK Vendors in Mobile

transformer

Many would argue that the mobile platform consolidation in the form of today’s Apple / Google duopoly is a good thing for developers; less choice, but two mature platforms and a billion-smartphones addressable market. Despite the platform consolidation, developers face real challenges not just in developing, but also in prototyping, designing, marketing, selling and supporting apps.

The quality bar for apps is increasing; apps need to incorporate more functionality in a slicker UI, a sexier package (graphical assets and messaging), as well as through the right marketing channels and at the right price, which is usually free-to-try. App consumers are demanding, expecting utility, convenience and easy of use – all at a low or free price point with monetization shifting from paid downloads to advertising and in-app purchases. Enterprise apps have to talk to legacy systems, be an effective part of a company’s business strategy, enhance brand image, while being secure, reliable and cost efficient to develop and maintain.

To support the community of 500,000+ mobile developers globally, a new “SDK economy” has emerged to cater to the needs of mobile developers. A storm of over 500 SDK startups and Enterprise IT incumbents, have emerged since 2009 to help developers in everything from app prototyping and debugging, to user analytics, planning tools, and customer support. These days developers can choose from a gazillion tools to monetize their apps, test, monitor app performance, manage security, study user behaviour, cross-promote apps to attract & engage users, and manage API use and simplify use of cloud services.

Today most of the supporting infrastructure for app developers resides, within 3rd party developer tools, rather than within the platform itself. This SDK economy has become the critical infrastructure underneath the app economy.

Growth and consolidation in the SDK economy

The SDK economy has seen an impressive amount of growth and consolidation in the last 4 years. It’s also an economy that’s intensely suffering in terms of monetisation.

The very first SDKs or tools for mobile developers were App store analytics (tracking sales & downloads) from the likes of Distimo and App Annie. Then came ad networks (mobile-centric like AdMob, acquired by Google), later followed by web ad networks expanding to in-app advertising, with ad networks and servers now in abundant supply. Cross platform tools followed soon after, helping develop apps for more platforms, from a single code base. Led by PhoneGap and Appcelerator, the supply of CPTs has exceeded 50 vendors, practically making this area of the tools economy a red ocean.

Looking for investment opportunities, VCs began investing in the companies that support Enterprise and Consumer mobile app development. The VC capital created value but it also changed developer perceptions of value, by forcing tool vendors to offer base products for free. It also led to a string of acquisitions (see below), as covered in VisionMobile’s Developer Economics Q1 2013 report.

Table: Mergers and Acquisitions in Mobile Developer Tools

Company Product & type Acquired by Date
Aptana Development environment Appcelerator Jan-11
Metismo Bedrock Java-to-native source code translator Software AG May-11
TapJS Game hosting platform and API AppMobi Jun-11
TapLynx App factory Push IO Jun-11
RhoMobile Rhodes enterprise apps framework Motorola Solutions Jul-11
Particle Code HTML development tools Appcelerator Oct-11
Nitobi Makers of PhoneGap Adobe Oct-11
Strobe Web app framework and app management platform Facebook Nov-11
Usergrid Backend-as-a-Service Apigee Jan-12
Cocoafish Post-download app services Appcelerator Feb-12
Worklight Enterprise app platform IBM Feb-12
Chomp App store search and discovery Apple Feb-12
TestFlight Beta testing Burstly Mar-12
Trestle Back-end-as-a-service Flurry Jul-12
Appstatics App performance trackingservice Appsfire Jul-12
Instaops User analytics Apigee Aug-12
Cabana A tool to turn Facebook pages to mobile apps Twitter Oct-12
Nodeable Big data processing Appcelerator Nov-12
Crashlytics Mobile crash reporting Twitter Jan-13
Wavii Natural Language Processing Google April-13
Parse Mobile Backend as a Service Facebook April-13
Handmark/ OneLouder App Store & Mobile app advertising platform Sprint Nextel May-13
Proxomo Software Mobile backend technology Lucent Mobile May-13
Appshed Cross platform tool & App Factory IDG Group May-13
IrisCouch Mobile Backend as a Service Nodejitsu May-13
Aepona API exposure and monetization platform Intel May-13
Mashery API management and monetization Intel May-13
Staq Game management platform PlayHaven May-13

There are three reasons behind the consolidation of the SDK economy:

  1. Capital changing the perception of value. VC capital allowed tool vendors to offer developer products for free to accelerate user acquisition.
  2. The need to subsidise developer onboarding. Developers are always the side of a mobile platform that Apple, Google, Microsoft or BlackBerry will need to subsidise. As a result platform-provided tools will be usually free and 3rd party tools will be prime acquisition targets for platforms themselves.
  3. Catering to adjacent developer needs. There are substantial benefits to developers by integrating functionality across tools (e.g. ad networks with user analytics or crash reporting with performance management), which inevitably leads to acquisitions on tools that are adjacent in the developer journey. Catering to adjacent developer needs also helps tool vendors attract and, most importantly, retain their user base.

Who stands to survive and win in this ongoing consolidation of the SDK economy? As is already evident from the earlier M&A list, consolidation will become clustered around where developer money is flowing into: App Marketing Services & Enterprise Mobile Services.

App Marketing Services

Mobile Advertising is expected to be a 20B market by 2015. Traditional ad networks have already ported their existing products – banner advertising – over to mobile in the form of in-app advertising. This model doesn’t work well yet in mobile and is a factor in why traditional ad networks are not yet profitable.

One VC backed company, Flurry, followed a completely different path to capture app marketing revenue. Flurry recognized developers would first worry about the challenges of developing their app(s) and then worry about monetization. Flurry offered developers a host of tools (many of them free) to develop and track their app usage, built a relationship of trust with their developers, emerged as a leader in the mobile services market, and then launched a range of products that will help developers monetize their apps.

Flurry considered the developer journey and built a spectrum of solutions to engage developers from the beginning to the end of that journey:

  • Analytics: a free service to measure actual use of the application
  • AppCloud (free): a back-end as a service
  • AppSpot: helping developers monetise, once an app has achieved traction
  • AppCircle: where developers can re-engage, promote and reach out to more users

Flurry is capturing the lucrative app monetization dollars because VC funding gave them a head start. With strategic acquisitions like TrestleApp (a backend service startup that helps developers minimise backend coding) and giving away their analytics for free, Flurry is building the first true mobile, data driven (Big Data) ad network.

Other companies are understanding this formula and making a play for App Marketing Services. Burst.ly acquired TestFlight earlier this year in a bid to become the vertical solution that covers all developers’ needs. Similarly, Facebook wanted to reinforce its relationship with developers and did so by acquiring Parse, a BaaS service. This acquisition reflects a growing trend where non-mobile companies see developers as platforms rather than customers, and developer tools as routes for customer acquisition, rather than feature enhancement.

Enterprise Mobile Services

Enterprise IT needs are different from consumer app needs. In enterprise apps, companies are less concerned with advertising or virtual good purchases and care more about security, stability, predictability and scaling down costs of mobile development and maintenance. Enterprise apps take performance, security and systems integration much more seriously than virality, direct monetization and high engagement.

So which mobile tools do enterprises need? User analytics, app performance analytics, crash reporting, integration with existing business logic (connectors with SAP, Oracle, IBM), identity management, data security, and own app store distribution, to name a few.

In enterprise IT, the incumbent back-end systems players like SAP, IBM and Oracle have been in the space for years and are very well positioned to ride the enterprise mobility wave. They stand as a formidable wall, deterring smaller vendors from entering the enterprise mobility market because they “own” the back-end and related ecosystems (including solution providers and integrators) within the largest companies. Mobilising those “owned” back-ends by 3rd parties is expensive because of the licensing schemes imposed by the incumbent back-end vendors.

At the same time, a wave of smaller, more nimble vendors is making a play at enterprise mobility. Appcelerator, after failing to effectively monetize their cross-platform tools, is now making a vertical stack play, much like Amazon AWS, for mobile. They help developers of any platform access traditional services, such as user management, object persistence, push notifications and analytics via API calls to their cloud services or on-premise installations of their suite. Apigee announced a new product aiming at Mobile, offering user analytics, performance management, crash reporting and network analytics. All of these players clearly want to offer much more than a product that focuses on a tiny vertical or niche market. On the server side, there are tools like Splunk, which give insights into how an app is performing, identify bottlenecks and discover patterns. These tools don’t exist yet in Mobile, and big players, like New Relic, just entered this space. At the same time, the back-end incumbents are strengthening their mobile play. IBM has laid out a mobile strategy that wants to bring in Mobile as part of a more traditional IT strategy. The recent acquisition of Tealeaf aims at helping traditional business better understand and analyze their mobile audiences.

Consolidation is already playing out within enterprise mobile services.

As the mobile market heats up, we agree that consolidation will likely result, as larger vendors look to shore up their mobile service offerings. Operational tools, especially those that deliver critical capabilities for monitoring the performance of mobile platforms and the web infrastructures upon which they rely, will become a strategic area of focus in this process. At the end of the day, any vendor who wishes to emerge as a key player in this arena must effectively monitor the whole application environment – transactions, mobile devices, network response, real user experiences, application servers, database connections and more.
— Jim Gochee, SVP Products, New Relic

Tool vendors who stick to single functionality – be it prototyping or internationalisation or customer support – will become either niche players with a small but profitable market segment or zombie companies, surviving with minimal profitability and, given the Series A crunch, they will drive consolidation to new heights in 2013.

The rise of the Mega SDKs

The consolidation of the SDK economy will continue to accelerate leading to the rise of the Mega SDKs, along the two clusters:

  1. App Marketing Services
    Winners will be those who build developer trust with end-to-end app development support, monetizing all channels that can maximise revenues or reach (e.g. ad networks, cross-promo networks, user analytics).
  2. Enterprise Mobile Services
    Winners will be those helping developers write across more screens, manage more users, and better understand users (e.g. cross-platform tools, BaaS, app performance management, API management).

Competition in the marketing tools will force companies to offer more and more for free, making it difficult for smaller startups to compete with the breadth of tools and the scale of companies like Flurry and Facebook. In the enterprise IT world, we should expect new titans to emerge or incumbents like IBM to enter and become the Amazon Web Services of mobile.

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Tools

Cross-Platform Tools Shootout

Cross-platform tools

The “write once, run anywhere” concept may be pure fantasy for most apps but sharing code across platforms is desirable and in some cases essential to making projects economically viable. With the application frameworks for all the biggest platforms being in different languages, the market for Cross-Platform Tools (CPTs) to enable code reuse is understandably the largest one (in terms of number of competing solutions) we track. The time required to evaluate all of them is far beyond what most developers can afford to spend on such research. So, which tools are the best?

Balancing mindshare with developer ratings

In our last developer survey we asked CPT users to tell us what they considered most important when choosing a CPT and also to rate their primary tool (some developers use several) across multiple criteria. Because that report was primarily about tools, several of the CPT vendors promoted the survey to their developers. Although we try to weight responses resulting from different promotions to attempt to remove this sampling bias in our statistics, it’s not possible to eliminate it entirely from the relative popularity of the tools themselves. As such, although the developer mindshare is a useful indicator of quality tools, we shouldn’t trust that alone. Amongst the most popular tools, it turns out that CPT users are generally very happy with their choices.


The average score out of 5 for all of the tools with more than 30 sets of developer ratings is close to 4 and weighting that by the relative importance of each aspect increases the average for all of the tools except Qt.

Compare with care

[tweetable]It’s important to be careful when comparing scores for individual tools[/tweetable], since they may reflect the typical backgrounds and expectations of developers using them rather than some absolute rating. For example, Sencha scored 4.08 for “Native UI look and feel” despite having pure HTML5/JS/CSS components while Appcelerator only scored 3.86 here despite binding JavaScript logic to actual native components! Haxe (pronounced Hex) also shows a couple of issues like this. It’s a relatively unknown code translation tool which seems primarily targeted at former Flash developers, although by no means limited to that audience. Since the Haxe language can be compiled to most of the major programming languages it scores very highly on “Availability across platforms”. However, it’s important to note that unless developers want to build their own application framework from scratch or integrate with one in the target language manually they’ll also need NME, which does support a very wide range of platforms but not as many as some other CPTs. NME’s feature set is fairly gaming oriented, with access to further native APIs via native extensions, much the same as most of the other CPTs – there’s certainly not sufficient additional API coverage built-in to justify the increased score. Clearly it’s important to make a more thorough evaluation of tools before making a selection, even so, lots of satisfied developers can be a good indication of an interesting tool to evaluate.

And the winners are…

Using the weighted average score as our benchmark, overall Haxe came out as a clear winner in developer satisfaction. Second place went to Sencha, which seems to come out top on almost all metrics (except popularity) amongst general purpose web-centric CPTs. A very close third was RunRev’s LiveCode, which has recently gone open source with a dual-licensing model. None of these top 3 tools by developer satisfaction have more than 12% mindshare amongst CPT users, let alone the wider developer population. They all cover mobile and desktop platforms and between them cater to most tastes – there’s a strictly typed language (Haxe), web standards (Sencha) or a very high level dynamic language (RunRev). All of them are free to get started with, why not give one of them a try and find out why their users are so happy? After all, a happy developer is a productive developer.

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Tools

Parse leads with 28% but competition for second spot is heating up as BaaS rises in popularity

As mobile apps become more sophisticated and expand their user base, the requirement for remote storage and user management becomes more important in terms of both functionality and scalability. This capability is usually provided at the backend that manages the application data. Off-the-shelf mobile Backend-as-a-Service can save a considerable amount of time for developers that require backend support for their apps. At the very basic level, mobile BaaS services offer a managed, cloud-hosted database that scales as the user base grows. All BaaS services provide additional functionality on top of this basic layer that may include user management, push-notifications and large-file storage among other.

Backend services used by 14% of developers

Backend services are currently used by 14% of developers, but their use is more frequent among developers working on 16+ apps per year (25%). Backend services are used slightly more on iOS (18% of iOS developers) than on Android or WP (both at 15%), while BlackBerry developers use these services much less (9%), perhaps as a result of limited support among these tools for BlackBerry.

DE13-21-01

Parse in the lead

The clear leader in the BaaS sector is Parse, considered by many as the de-facto BaaS provider and used by 28% of all BaaS users, followed by enterprise-focused CloudMine, used by 11% of developers. Sencha.io and Appcelerator, both commanding a 10% share among developers using BaaS, are solutions that are well integrated with their corresponding development frameworks (Sencha and Appcelerator) and therefore not directly competing with services such as Parse or StackMob. While the BaaS market is crowded, services address different niches that differentiate them among competitors. As a result we have yet to see any service dominating the sector to the extent observed in other developer services such as advertising or user analytics.

While the core features may be common among BaaS providers, there are significant differences and advantages to each of these services that may make the selection easier. For example, exporting data may not be available on all services so if this is a key requirement, then a number of these services can be ruled out. Developers often find BaaS restrictive for their application requirements so several BaaS providers such as Parse, CloudMine, StackMob and Kinvey allow developers to implement custom business logic. However, developers frequently opt for a custom-built backend solution rather than a BaaS for greater flexibility.

Selection criteria

The main selection criterion for developers is, as in most third-party developer services, availability across platforms. However, the richness of the feature set is almost equally important as is the flexibility of the service, e.g. the ability to implement custom business logic. Ease of integration and use, stability and performance are important to 25% of developers using backend services.

Another important aspect of backend services is the pricing flexibility, i.e. the way costs scale with usage. Many developers whose apps experience a sudden surge in user base may find it extremely difficult to scale their costs as usage grows: a free service using a third-party backend that suddenly amasses hundreds of thousands of users will incur significant operational costs as access to the backend rises with the number of users. Developers should keep this in mind when designing their apps and backend service providers should aim to align pricing strategies with developers’ business models.

Backend features

We asked developers using backend services to highlight the most important feature for them. 28% (of developers using backend services) indicated data management and 18% indicated user management and authentication. Next most important features are push notifications and content management highlighted by 11% of developers using backend services. Less important features include analytics (9%), file storage (7%), cloud code (custom logic) (6%) and social graphs (3%).

The backend service sector is relatively young and expected to grow as developers familiarise themselves with such services and realise their potential. At the same time, there is much room for improvement as BaaS providers better understand and adapt their services to developer needs such as flexible and customisable business logic.

[doritos_report location=’DE13 Article – BaaS’]

Which BaaS services are other developers using?


[toggle title=”Important things to know about this interactive graph”]

  • All the filters in the graph refer to survey questions in which respondents could select multiple answers. This means that there is no direct link between the filter and the use of the tool. For example, filtering on “Android” means that the respondents develop Android apps. It doesn’t imply that they use the tools for their Android apps specifically, or even that the tool supports the Android platform. Use filters as a guideline only.
  • Keep an eye on the sample size. If the sample size is low, the graph doesn’t offer strong conclusions about the popularity of different tools. Use your good judgment when making decisions.
  • In this graph, “Other” was removed as a possible answer. A lot of respondents used the “Other” answer to indicate that they use an in-house solution, which is not a “Backend-as-a-Service” at all.[/toggle]

    Find the best BaaS service for you!

    [sectors slugs=’backend-as-a-service’]

Categories
Tools

Advertising is the most popular developer service, AdMob dominates (65%)

Advertising is the most popular developer service

Among those developer services that we benchmarked the most popular is ad networks and exchanges, reflecting the widespread popularity of advertising as a revenue model. Advertising is the most popular revenue model, while ads can also act as a promotion channel that facilitates app discovery.

With advertising being the most widely used revenue model among developers, advertising services attract considerable developer interest taking the top spot among the developer tools that we benchmarked. Providers of ad services monetise their service by taking a direct cut of advertising revenue generated by developers. With 100+ ad networks and exchanges, there is intense competition, regional specialisation and niche solutions. In spite of this, several ad services are not profitable.

The services we benchmarked are either advertising networks that provide direct access to their own pool of ads or ad exchanges (aka mediation engines, not real-time bidding exchanges) that act as aggregators, automating access to a large number of individual ad networks. Ad exchanges offer some flexibility to developers by allowing them to select between multiple ad networks through a single SDK – offering better fill rates and eCPMs. At the same time, ad network SDKs often provide access to more features available, than the generic features available through an ad exchange.

Ad services are most popular with Windows Phone and Android developers

Among developers using Ad services, 27% use an exchange, however, just 16% utilise an ad exchange as their primary ad platform. Most developers using ad services use just one service (61%), 25% use two services and 14% use three or more services. Overall, developers use 1.59 services on average. There is quite a large variance in the number of developers using ad services depending on the scale of development: those developing less than 5 apps per year tend to use ad-services much less than those developing more than 5 apps per year. Among developers that develop more than 16 apps per year, most likely working for large publishing houses, software services companies or agencies, about 60% use ad services in their apps.

Ad services are most popular with those who develop primarily on Windows Phone and Android (46% of WP developers and 43% of Android developers), and less so on iOS and BlackBerry (35% and 31% respectively). This is in agreement with our findings on revenue models being used on each platform, with developers on Android and Windows Phone relying heavily on advertising to monetize their apps.

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AdMob dominates ad networks (65%) and Inneractive leads among ad exchanges (12%)

AdMob, a service acquired by Google in 2010 is clearly the dominant platform in mobile ad services, adopted by 65% of developers that use ad services. AdMob has recently expanded to ad exchange services, a move that aims to counter the threat that ad exchanges pose for Google. Second runners, each used by 12% of developers, are Inneractive, an ad-exchange/mediation service and InMobi, an ad network growing out of India to become a major player in emerging markets: InMobi’s mindshare is 17% in Asia and 33% in Africa. Apple’s iAd service comes fourth overall with 11%, and despite being quite popular among iOS developers, AdMob is the leading ad service on iOS, used by 66% of iOS developers that we surveyed.

Ad exchanges are complementary to ad networks. For example, developers will use one service with high eCPM but low fill rate and another with lower eCPM but nearly 100% fill to plug the gaps in the better paying service. When selecting an ad network or exchange, availability across platforms comes on top in both cases. Ease of integration is also very important, particularly so for developers using ad networks. Supported ad formats, revenue potential and fill rate are secondary selection criteria, and therefore differentiation factors across advertising services.

[toggle title=”Important things to know about this interactive graph”]

  • All the filters in the graph refer to survey questions in which respondents could select multiple answers. This means that there is no direct link between the filter and the use of the tool. For example, filtering on “Android” means that the respondents develop Android apps. It doesn’t imply that they use the tools for their Android apps specifically, or even that the tool supports the Android platform. Use filters as a guideline only.
  • Keep an eye on the sample size. If the sample size is low, the graph doesn’t offer strong conclusions about the popularity of different tools. Use your good judgment when making decisions.[/toggle]

    Find the best ad service for you!

    [sectors slugs=’ad-networks-exchanges’]

Categories
APIs Tools

Which apps make more money? App monetization insight from our Developer Economics 2013 report

[This post by Andreas Pappas, Senior Analyst at VisionMobile, first appeared on the VisionMobile blog on April 3, 2013.]

[How do app developer revenues vary by country, or platform? Does the number of platforms make a difference to app revenues? Which models bring in the most revenues? We revisit Andreas Pappas’ November analysis of app monetisation with more insights from our Developer Economics 2013 survey across 3,400+ developers – while launching our latest survey, which is available here]

Developer-Economics-volume-5

Back in November, we looked at which apps make money based on research on how app revenues vary by platform, app category, country and more. In this article we update our analysis on app monetisation based on the latest research from Developer Economics 2013 across 3,400+ app developers, including analysis that did not make it into the report.

We ‘re also proud to launch our very latest Developer Economics survey, which reaches across thousands of app developers and provides the data for our famous state of the developer nation reports. Thanks to the sponsorship by BlackBerry, Mozilla, Intel and Telefonica it possible to provide these reports and additional insights, for free, to the entire mobile community.

Take part in the survey, spread the word and help us drill deeper into the app economy and what makes it tick. We have prizes aplenty for developers, with 7 devices up for grabs (one iPhone 5, two Samsung Galaxy SIII, two Nokia Lumia 920 devices and two BlackBerry Dev Alpha handsets) – plus an AR Drone 2.0, a Nest Learning Thermostat and a Nike Fuel Band for participants who also subscribe to our developer panel. Last, but definitely not least, our friends at Bugsense are giving away one month of free crash reporting to each and every participant.

Survey Q1 2013

 

Developers in North America lead the revenue leaderboard

We’ll start by taking a look at income distribution by the region where app developers are based. Last time we saw that US developers earned almost double the revenue of UK developers. Based on our Developer Economics 2013 data, North America (and particularly the US) is still in the driving seat of the mobile app economy with developers in North America generating about 30% more than their european counterparts, who in turn generate 47% more revenue than developers in Asia. To some extent higher revenues for NA developers are explained by higher consumer spending in the US and higher penetration of iOS, which as we will see later on, still generates higher revenues than other mobile platforms. Note that across this analysis we are restricting our sample to mobile app developers, and have excluded the top 5% of revenue earners in order to minimise the effect of outliers.

North America leads app revenue leaderboard

While app development activity is booming in Asia, the average app-month revenue is quite lower than in the US and Europe, although developers in Asia develop, on average more apps and use more mobile platforms. As we explained in the previous article, there are multiple reasons for this revenue gap, but the prevailing reason is the fact that paid apps are not popular in most of Asia, the country that drives the Asian app economy. Instead, developers in Asia rely much more on advertising revenue, which, according to our findings is the least profitable revenue model.

iOS still monetising better than other platforms

iOS continues to dominate platform revenues, generating, on average, 30% more revenue per app-month than Android. The revenue gap has reduced by 5 percentage points compared to that reported in our Developer Economics 2012 report in June 2012.

iOS continues to dominate revenues

At the same time, Windows Phone has caught up with Android and seems to be doing slightly better. Although the 5% advantage is arguably within the margin of error, Windows Phone has significantly improved its position relative to the figures reported in the Developer Economics 2012 survey, when it generated, on average, about half as much revenue as Android. How has the landscape of platform monetisation changed in Q2 2013? Join the survey and help us track the state of the developer nation.

Multi-platform developers earn more

Developers using more platforms earn more

There is a wide revenue gap between developers/publishers using 6+ platforms and those using 5 or fewer platforms, with those developing for 6+ platforms generating, on average, 75% more revenue. However, only a small part of the developer population (4%) develops on 6+ mobile platforms; these are probably established services with a large footprint that want to ensure that their apps are universally available (e.g. Facebook, Skype etc.) or large software houses with a large enough pool of resources to target multiple platforms for their customers.

Those developers employing just one platform are probably solo, amateur developers or have not yet had the success that warrants (and allows) an expansion onto more platforms. As developers become more successful, they will expand onto new platforms and generate more revenue. So while, expanding on more platforms is not sufficient to generate more revenue on its own, those that do find success are likely to invest in a multi-platform strategy.

Extending apps to new markets is a profitable strategy

We asked app developers how they decided on which apps to develop or work on next and then looked at the way revenues vary depending on their strategy. While most developers will develop apps they want to use themselves (50%), this is apparently the least successful strategy and should not become the sole deciding factor for your next app.

Extending apps into new markets pays better

Developers that use some form of market research such as discussing with users, monitoring apps stores or directly buying market research are much better off, generating at least double the revenue of those who just develop the apps they want to use. However, market research is not widely used among the developer population: only 24% of developers discusses with users, highlighting a lack of business maturity and also a gap in frictionless 2-way communication channel between developers and users.

Overall, the most successful developers are those that extend apps to new markets, either to new geographies or different verticals. To some extent, these strategies rely on copying the recipe of an already established and successful business: these are apps that have been tried and proven in at least one market and are generally less risky options or “low hanging fruit” for developers. Why start from the ground up when you can stand on the shoulders of giants?

The most lucrative revenue models are off limits for most developers

When talking app monetisation, there are over 10 different revenue models to chose from. Device royalties and distribution licensing fees are the top-grossing models but are quite rare among app developers due to their high barriers to entry. These models imply deals with device manufacturers and distributors which means long, expensive sales cycles and a successful app to start with. Among the rest of the revenue models, commissioned apps (development for hire) come on top since they come with a low risk and guaranteed income for developers that work under contract.

Royalties & licencing fees pay better

The next most lucrative revenue model is the subscription-based model but this also comes with caveats: a subscription service implies a significant investment in licensing, and maintaining quality content or services that keeps users engaged on an ongoing basis.

Among the revenue models that are most popular and more accessible to developers, In-app purchases come on top, generating, on average 34% more revenue than Freemium and 43% more revenue than Pay-per-download. In-app purchases and Freemium models are becoming increasingly popular, now being used by a quarter of developers as they seem to be appealing to consumers. We ‘re revisiting the topic of most lucrative revenue models in our latest survey. Join in and help us size the app economy.

Smart developers use smart tools

Finally, we take a look at how developer revenues correlate to the use of third party tools and services. It’s interesting to see how app revenues correlate with usage of performance tracking and management tools like user analytics and crash reporting. Developers using crash reporting and bug-tracking tools such as Crittercism or BugSense generate on average, three times more revenue than developers who don’t use these. Similarly the usage of User Analytics (e.g. Flurry, Apsalar) services is also associated with much higher revenues, with those using user analytics services generating 168% more revenue than those who don’t.

Higher revenues for developers using dev tools

Both user analytics and crash reporting services are used by experienced developers who recognise the importance of optimising for user acquisition, activation and retention, while reducing in-the-field crashes and the resulting user churn.

Track the state of the developer nation

[tweet_this content=’App developer? Take the new Developer Economics survey and win prizes!’ url=’ http://www.visionmobile.com/DS13PortalBlog’]These insights are made possible by our ongoing surveys. Join the latest Developer Economics survey to help us draw deeper insights into monetisation, the size of the app economy and the debate of HTML5 vs. native. In this survey we ‘re focusing on the population of iOS, Android, WP, BlackBerry and HTML5 developers, across countries, app categories and developer types. If your are a developer take the survey, or otherwise spread the word and watch this space for an update on revenues, platforms and the state of the developer nation.[/tweet_this]

And don’t forget to fire away with those comments, rants, criticism, praise or simply feedback on what you ‘d like to see next.

Andreas (follow me on twitter @PappasAndreas)

Categories
Tools

Capturing More Value with Voice Services

Voice Services

Of the tools and services for developers we asked about in our last survey, one category stands out by miles as having the wealthiest developers: voice services. If we exclude developers earning over $50k per app per month (as we typically do for other tools categories since a small number of successful developers can heavily distort the data) from those interested in money and reporting their income to us, then those using voice services earn an average of $4379 per app per month. This is a similar level of revenue to those using crash analytics services, which we’ve already shown is correlated with financial success. However, excluding those earning over $50k per app per month is rather unfair for voice services since this is almost 10% of developers using this tool category; if we include them, the average rises to $13410 (the comparable figure for those using crash analytics is $8764). Of course there’s a lot of variety in the voice services sector and the revenue is not at all evenly distributed.

Popular is not always profitable

In order of popularity, the most used services in our survey were Twilio, Skype, Mircrosoft & Tropo. Of those, the best in terms of revenues, Tropo, had 77% of developers above the “app poverty line” of $500 per app per month, whilst the worst, Microsoft, had 77% earning below that level of revenue. Outside of the top four services by popularity, there was a wide range of developer success but the average revenue was very close to the average for the whole category.

Skype is an extremely popular consumer service but their services for developers, particularly mobile developers, are quite limited in scope. SkypeKit, which is their offering for embedding Skype functionality in devices and other apps is not permitted to be used in mobile devices. Although Microsoft has similar capabilities to Twilio and Tropo through their acquisition of TellMe that is not yet fully integrated into their standard developer offering. If they try to use their capability to differentiate the developer offering for Windows Phone then it’s likely to remain limited by the success of their mobile platform.

Isn’t voice commoditised?

Whilst having voice services tied to a single platform is not ideal, cross-platform availability is not critical. Developers whose main reasons for selecting their service included cross-platform availability earned a below average for the sector but still very respectable $8120 per month. Those focused on call quality did slightly worse, while developers whose primary concern was cost did very poorly at only $2280 per month on average. At the top end of the spectrum, the only reasons correlated with revenues above $20k per month were feature set and scalability. The feature set breakdown in our survey makes it much clearer where the bulk of the money is being made by users of voice services. Fortunes are not being made by delivering generic VoIP services to giant user bases; in fact, the average number of active users for the most popular apps of developers across the whole voice services sector is only about 27,000. On the contrary developers using voice services for inbound calls averaged $25k per app per month, while those using intelligent call routing and/or Interactive Voice Response (IVR) systems averaged $30k per app per month. While it is possible that there are some developers doing good business using these cloud services to replace legacy IVR services or extend the reach of such services to smaller businesses, it’s very likely that many of these developers are building customer services channels for their own apps. In this case there’s some survivorship bias here – only fairly large and successful businesses would build out such complex customer services systems. Also it’s quite likely that businesses that need voice and SMS based customer service channels are about more than just an app, in which case the revenues associated with the apps may reflect sales of external goods, services or content and are thus not directly comparable with those of developers purely monetizing through paid downloads, advertising or in-app purchases (although all of these revenue models are used by some developers using these voice features).

Consider the costs

When you consider that numbers rented, call minutes and SMS’s sent all have associated costs from the voice services provider it’s not so surprising that a typical voice services developer has higher revenues – they need to in order to stay in business! The existence of these voice platforms is strong evidence that basic voice is commoditised and there’s very little room for differentiation or profit simply packaging and branding such services for consumers. So, while the revenues for all kinds of voice app are higher than average, the associated costs are higher too. Those developers that capture significant value with voice services are using them to add value to some other service, rather than trying to re-sell them directly. That said, these services are very easy to use and relatively inexpensive. It’s worth thinking about ways you could use them to build better relationships with the customers for your app business.

Categories
Tools

Voice on the verge of break-through? Going beyond telephony with Voice Application Platforms

Voice communication is one of the core functionalities of every mobile phone. However, telephony is up for a big shake-up, as Internet telephony companies like Skype and voice application platforms like the ones below are challenging century-old assumptions about how people speak with each other remotely. (You can read all about this trend on the VisionMobile blog: here and here.)

Indeed, voice is no longer the domain of telecom operators alone. Voice Application Platforms allow you to make creative solutions that integrate voice communication deeply in your app: as voice messaging, click-to-call, person-to-multiperson, voice search and more.

Voice platforms cater to many use cases

Voice APIs allow developers to integrate voice functionality within their apps, bypassing the telco services that traditionally provided these capabilities. Developers use Voice services to enable a number of use cases such as voice calls, conference calls, video calls, voice transcription, IVR services etc. Telcos such as AT&T and Verizon are reacting to this trend (for over-the-top services) by opening up access to their services via APIs.

While Voice services cater to a number of different use cases, their use is relatively low among developers because, contrary to other tools in the Developer Economics 2013 survey, they are specialised tools that provide functionality within an app rather than support for the app or the business (as, for example, user analytics or ad services).

The different services surveyed cater to a different mix of use cases, and therefore do not always compete against each other. Developers integrating voice services in their apps tend to use them primarily for enabling voice call capabilities within their apps, including Conference calls (33% of developers utilising Voice services), Outbound calls (29%), and Inbound calls (24%). About a quarter of developers using voice services, are interested in Speech recognition while 20% use them to implement IVR applications. Callback function is also quite popular as indicated by 20% of developers utilising using voice services.

DE13-17-01

Skype (39%) is leading, with Twilio (31%) following

Skype leads in developer mindshare when it comes to voice services, used by 39% of developers that integrate Voice services within their apps. However, Skype does not provide services through an API but rather through URIs that redirect the user to the Skype client which must be installed on the user’s device. Developers using Skype use it primarily for conference calling (55% of developers utilising Skype), Video calls (43%) and Outbound calls (37%).

Twilio follows at a short distance, utilised by 31% of developers implementing Voice services. Twilio API allows developers direct access to voice services within their apps. Twilio users mostly use the service for Outbound and Inbound calls (43% and 41% of developers using Twilio respectively).

Microsoft Voice services, used by 27% of developers using Voice services, use it mainly for Speech recognition (44% of Microsoft voice services users) and Speech transcription (30%). Telco APIs such as those provided by AT&T and Verizon are less popular (17% and 10% of developers using Voice services), while OneAPI, a joint attempt by telcos to react to the OTT threat, seems to fall far behind at 4%. The AT&T API is mainly used for Conference calls and Callback (36% and 32% respectively). The latest AT&T Call management API, powered by Voxeo Labs Tropo Platform, allows users to link their cellphone number to OTT Voice services provided via AT&Ts API, negating the need for a new phone number. Tropo, by Voxeo Labs is used by 5% of developers using Voice services and is mainly used for Conference calls (50% of developers using Tropo), Speech recognition (41%) and IVR applications.

Quality is still key selection criterion

Most developers (39% of those using voice services) highlighted performance and quality as a top selection criterion for Voice services. Voice quality is not guaranteed on mobile data networks but is critical in most use cases where voice services are used, particularly in real-time voice such as conference calling. While network quality is often out of the direct control of voice services providers, there is still a lot that can be done on the service providers’ side such as optimising encoding algorithms and scaling the architecture of their voice infrastructure. Ease of integration and availability across platforms, the prevailing selection criteria among all third-party tools and services are also important when selecting a Voice services, as highlighted by 35% and 34% of developers using Voice services, followed by cost (27%).

[doritos_report location=’DE13 Article – Voice platforms’]

Which voice services are other developers using?


[toggle title=”Important things to know about this interactive graph”]

  • All the filters in the graph refer to survey questions in which respondents could select multiple answers. This means that there is no direct link between the filter and the use of the tool. For example, filtering on “Android” means that the respondents develop Android apps. It doesn’t imply that they use the tools for their Android apps specifically, or even that the tool supports the Android platform. Use filters as a guideline only.
  • Keep an eye on the sample size. If the sample size is low, the graph doesn’t offer strong conclusions about the popularity of different tools. Use your good judgment when making decisions.[/toggle]

    Find the best voice provider for you!

    [sectors slugs=’voice-platforms’]