Mobile applications are shaping how users engage with content via mobile devices, and online businesses looking to expand their mobile presence this year should make developing a mobile app among their top priorities.
In order to understand why apps are important, and how they've transformed the mobile industry, we need to take a trip down smartphone memory lane. It wasn't long ago that mobile phones were dubbed "smart" if they allowed users to send and receive emails or browse the internet. From 2001 to 2007 we witnessed a host of mobile devices that further enhanced the internet-browsing experience, including innovations from Palm, Research in Motion (Blackberry), and finally in 2007, Apple's iPhone. With its intuitive touch screen and irresistible design, the iPhone revolutionized mobile web browsing, leaving all its predecessors behind.
Mobile apps rival mobile browsers for user engagement
However, in 2008, Apple changed the game by allowed users to run native applications on the iPhone and introduced an open marketplace for developers to distribute their applications. In doing so, Apple found even a better way to bring the mobile web to its subscribers by delivering it in what BusinessWeek's Kevin Tofel called "bite-size chunks" which brought, "...a level of navigation and enjoyment not found in a browser."
Although most websites today offer their content optimized for mobile web browsing, the visual appeal and ease of use of apps has shifted mobile-web usage away from the browser. Name a popular brand, and you'll find that more often than not they rely on an app for their mobile presence.
Apple's app store ignites the mobile industry
Once Apple launched its App Store, smartphone-penetration rates started to grow exponentially. In Q2 2008, there were 15M smartphone subscribers compared to 26M in Q2 2009 (according to Nielsen). That's a penetration growth rate of 72% in only one year!
Apple's success with the iPhone App Store (170,000 apps with over 3 billion downloads to date) has invigorated a mobile content services market that has been suffering from lethargy in recent years. It also spurred its competitors Microsoft, Palm, Nokia, Blackberry and Google to come out with their own mobile app stores in 2009-2010, leading to more smartphone growth and more app-based mobile experiences.
What's the best approach for online merchants?
For eCommerce merchants looking to enter the mobile space by building a native application, there is definitely a growing market, and the iPhone is the place to start (followed by Android). It was recently revealed that 70% of mobile-commerce market is dominated dominated by two apps (Amazon & eBay), and those apps are mobile versions of their web-based stores, demonstrating that providing a simple and enjoyable user experience will generate usage, consumption and revenue.
And although the market leader amongst all smartphones in the US is Blackberry (RIM) with 37% of all smartphone subscribers, the iPhone leads in overall application usage.
Nielsen also found that iPhone and Android users, who enjoy a larger universe of applications to choose from, have significantly more apps installed on their devices as opposed to Blackbery users. Users of Android and iPhone also report the highest satisfaction rates from their respective App Stores (Apple - 84%, Android - 81%).
Brands are already making mCommerce a priority
According to eMarketer findings, 64.8% of marketers and publishers in North America reported planning to invest in mobile apps this year. This clearly indicates the emergence of apps as a constituent part of mobile-marketing and media strategy. Ecommerce expert and Forrester analyst Brian Walker advises brands to take their mobile presence a step further, "Now that brands have started rolling out a mobile presence, they will want to move from a service model to a transaction model."
As support and development for mobile apps intensifies, smartphone adoption rates continue to rise and app stores are becoming valuable marketplaces which no company or brand can ignore.
This post was written by Tamar Levin, a research analyst at Magento. Tamar is a seven-year veteran in the Market Research and Insight Industry. Prior to Magento, Tamar was staff research manager at one of the world’s leading market-research agencies, TNS (part of WPP’s insight consultancy), where she conducted global-market & industry analysis spanning 75 countries.