The truth about the smartphone app business

It has become a reflex. Hundreds of millions of users open an app as soon as they turn on their phone. There are over 1.43 million different apps on Google Play, compared to 1.21 million in the Apple Store. The number of developers is approaching 400,000, to the great advantage of online stores. For Apple, for example, apps represent a thriving business: any business can develop with the free iPhone simulator. But to put it on the App Store, you have to pay 99 to 299 dollars per year and pay Apple 30% of the revenue generated.

hits and flops

The developers aren’t that bad. Some know fortune, such as those in gambling candy crush, issued by the British King Digital, valued at more than $5 billion on the New York Stock Exchange. WhatsApp, which allows you to send messages without operator intervention, was so successful that Facebook bought it for $19 billion. But the hits should not overshadow the flops. According to a study by StarDust, more than 60% of apps are “dead”; they never received any updates or received more than ten comments. Paid apps are more likely to flop: only 20% of them have been downloaded more than 100 times. Conversely, free apps monopolize over 90% of downloads. But how can you make money with it? The easiest solution: banner ads. But this only works with stars downloaded millions of times.

The developers therefore resort to other tricks to encourage the user to open their wallet. The famous Candy Crush prefers an approach free to play (or F2P), which consists of launching free games and inducing users to pay to obtain virtual goods or access certain levels. In the last quarter of 2014, the publisher recorded a net profit of 140 million dollars. Quite similar, the freemium offers a basic free version and a more extensive and paid version. The consumer can therefore use the app without advertising, with extensive functions.

Purists reserve the word premium for high-end versions of apps that offer specific services to their subscribers. In addition to video games, the model is used by the press or news sites, and it is this model that makes the newspaper possible The world to appear in the ranking of the ten most profitable apps in France, compiled by the company App Annie. Another technique is emerging: the In-App purchases, in-app purchases. Amazon is a master of the past at this approach: the Kindle app, which turns your smartphone into a reader, is free. But the content has been paid for.

The data rush

More crafty, the app business is largely based on the exploitation of personal data. These have become the black gold of the 21ste century, but if there are commodities markets, there is still no exchange of personal data. A Vodafone study for the UK shows that monetizing data could pump €21 billion into the UK economy.

The sum has something to dream about. “There are several methods for estimating the value of data, tempers Mouloud Dey, director of solutions and emerging markets at SAS. You can take the capitalization of Facebook and divide it by the number of subscribers, which is, depending on the value of the promotion, from 40 to 300 dollars per person. This value can also be estimated by calculating the loss of revenue when the data disappears, after a hack or an accident. » This is what happened to Target in the United States, where the data of 110 million people was stolen. The calculation shows that this data is worth $1.18 per person… Among the “data brokers”, a profession banned in France, there is a beginning of the stock market: in the United States an address is worth 50 cents, a date of birth $2, a Social Security number $8, a military booklet $35.

As a result, we are witnessing a rush for data, whether it be relatively innocuous information, such as gender or age, or other, more personal information, from taste and use to more intimate elements, such as health. Compensation is often implicit: the consumer gets access to a free service, in exchange for which he provides personal data. The data is then used by the publisher. This is the most widespread economic model. Almost all applications require access to the address book, browsing history, geolocation, photos, in short, all information on the smartphone. In case of refusal by the mobile user, the installation is impossible… Consumer associations, such as Que Choisir, complain that this collection of data and its use is very opaque.

Paying for an app doesn’t make it harmless, though. Most premium apps even engage in large-scale looting. In order to pay, the consumer is obliged to provide bank details with which he can be identified. This is the case on Amazon Appstore: the customer is registered, listed, we know his name, his delivery address, his bank account number.

false tip

Finally, a large number of apps can be downloaded for free without being free to the user. For example, banks offer apps that allow you to access your account from your smartphone. The bank is not paid by charging for the app, but by building customer loyalty and charging various account fees. The same goes for EDF, whose free app allows customers to send their electricity consumption figures. “These are customer relationship tools, explains Frédéric Sebag, co-president and founder of Open . from. The question is not what these apps deliver, but how much it would cost not to have them! »

Leave a Comment