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Thoughts on iPhone apps

Blogging some thoughts live from MobileBeat 2008 at the PlugandPlay tech center in Sunnyvale, CA...

It's been an interesting couple of weeks looking at the first set of iPhone applications. Already we've seen a similar dynamic to apps on Facebook - a small number of popular apps with download numbers orders of magnitude higher than the rest.

In common with FB apps, the average price for an IPhone app is close to free - begging the question "how does anyone beside the device manufacturer or the wireless carrier make money?"

For sure we're early in the mass adoption of mobile apps but I see some interesting veins of value to pursue.

1. Applications that deliver their real value via a service. The app is free and provides the portal to the service leveraging portable peripherals (GPS, camera etc.) plus compute and storage resources.

2. Applications that collapse the function of other devices onto the phone. For example, I got an email today from one of my blog readers who had purchased a $2 app for recording voice notes rather than carrying yet another device (and paying someone else yet another $40+). But you still need to think of the back end service...

3. Apps that bind the manufacturer closer to their user - think of the relationship that you can build... Some examples, Microsoft XBox and XBox Live, Amazon with Kindle and Apple with iPod/iPhone with ITunes.

This last vein is applicable beyond mobile as it creates a more durable link to the end user for selling the next device and delivering up-sell or cross-sell revenue.

That's a significant margin improvement opportunity in a space where price/feature wars prevail.

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STU PHILLIPS
MENLO PARK, CALIFORNIA

Intense Brit, lived in Silicon Valley since 1984. Avid pilot, like digital photography, ham radio and a bunch of other stuff. Official Geek.

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