Posted by Peter Farago on Sun, Jan 24, 2010
Insights from Tracking 200 Apps Across 50 Apple Tablets in Testing
Using Flurry Analytics, the company identified approximately 50 devices that match the characteristics of Apple's rumored tablet device. Because Flurry could reliably "place" these devices geographically on Apple's Cupertino campus, we have a fair level of confidence that we are observing a group of pre-release tablets in testing. Testing of this device increased dramatically in January, with observed signs of life as early as October of last year. Apple appears to be going through its cycle of testing and polish, which is expected from any hardware or software company as it nears launch.
Apple is expected to announce the yet-to-be named hardware on Wednesday, January 27 in San Francisco. There has been broad speculation about the functionality of the tablet, and what kinds of content and media partners the new device will feature. Additionally, there has been speculation about the most likely use cases for this kind of device, as well as which operating system the device will support. The choice of operating systems is particularly important for application developers because if the tablet runs on the same or upgraded operating system as the iPhone, then current applications running on the iPhone will also run on the tablet.
On these devices, Flurry observed approximately 200 different applications in use by testers. Studying category trends provides insight into the kind of user Apple is targeting and how it expects the device to be used. Below is a chart that shows the number of applications in use by category across test devices.
For Play not Work
Historically, tablet devices have been considered substitutes for anything where workers use clipboards, note pads or day runners. In more industrial settings, they could be used for inventory management, taking purchase orders or data entry. However, there was a surprising dearth of applications that support these use cases. Instead, the largest category was games. With a larger screen, more memory, multi-touch and multi-tasking expected, games will play better than ever on Apple handheld devices.
A Media Machine
The tablet device clearly targets consumers. The mix of applications observed comprises mainly of media and entertainment consumption as opposed to enterprise, productivity and computing. Specifically, popular tested apps include news, games, entertainment and lifestyle. In particular, there was a strong trend toward news, books and other kinds of daily media consumption, including streaming music and radio. In fact, the most widely downloaded of any single specific application was a new app. In its October Pulse report, Flurry studied iPhone as an e-reader and the threat this poses to Amazon Kindle. With rumors of large newspaper and book publisher deals, combined with its reading-friendly form factor, we speculate that the new Apple tablet will focus heavily on daily media consumption. Finally, across all applications detected, there was a strong theme of sharing and/or social interaction including social games, social networking, photo sharing and utilities like file transfer applications.
Not the Battle for Your Living Room
The device is positioned to appeal to the users who are out-and-about rather than compete directly against the TV, stereo and game console in the living room. With supply chain reports from Asia that light-weight 10.1" LCD and OLED screen components are in short supply due to large purchases presumably by Apple, we can surmise that the device will be thin and light, designed for portability. Further supporting this notion is the pattern of apps we detect for restaurant, movie show times and other apps that help users find points of interest around them, including travel guide applications.
A Rocket Booster for Developers
A noteworthy observation is that the Apple hardware we detected was running on OS 3.2, which has not yet been released. Currently the iPhone and iPod Touch are running on OS 3.1.2. Historically, Apple releases OS upgrades just before releasing new hardware. With significant expected changes (e.g., multi-touch, multi-tasking) for the tablet device operating system, there was concern among application developers that the tablet would not support existing iPhone applications. However, from the testing we observed, it appears that Apple wants to leverage the 130,000+ applications already available in the App Store on day one for the new device. For the developer, this is good news. Senior research analyst with Piper Jaffray, Gene Munster, is forecasting 2010 sales of iPhone and iPod Touch devices at 36 million, an increase over his estimate of 25.7 million for 2009. With tablet shipments for 2010 perhaps reaching 10M, according to AVI Securities, we see this as a major boost to application developers.
Posted by Peter Farago on Wed, Jan 13, 2010
Flurry Estimates 20,000 First Week Nexus One Sales:
Not an Apples to "Apple" Comparison
The Google Nexus One launch has become the most controversial and confusing Android handset launch to date. With publicity "leaks" over the holiday season, the Nexus One handset received unprecedented buzz. This same hype helped create the expectation of a revolutionary Android handset and its potential to be an iPhone killer. To gauge the success of Google's first handset launch, Flurry leveraged its analytics reach to estimate launch week sales of the Nexus One.
Flurry monitors usage of more than 10,000 developers' applications on iPhone and Android platforms. In total, Flurry tracks applications on approximately four out of every five iPhone and Android handsets in the market, generating over 25 million end user sessions per day. To estimate first week sales totals for the Nexus One, myTouch 3G, Droid and iPhone 3GS, Flurry detected new handsets within its system, and then made adjustments to account for varying levels of Flurry application penetration by handset. Flurry additionally crosschecked its estimates against Apple actual sales, released for iPhone 3GS, which totaled more than one million units over the three days, June 19 - 21, 2009. Flurry first week sales estimates can be found in the table below.
While Flurry estimates that Nexus One was outsold by Droid by more than 12 times, myTouch 3G by 3 times and iPhone 3GS by a staggering 80 times, it's worth noting there are significant differences in the marketing, distribution and perception of the device as revolutionary vs. evolutionary. In short, key business decisions and other factors related to the Nexus One launch make an "apples-to-apples" comparison difficult.
As a product, the Nexus One boasts the most advanced Android OS to date as well as unique features, such as Google Voice and Google Maps. However, potentially due to the heightened "promise" created by early buzz, the handset has ultimately fallen short on sales expectations. Without the "wow factor" now expected with each new challenger to the iPhone, especially the first smartphone with Google's own branding, demand generation has been modest.
Next there is distribution, pricing and marketing to consider. For its release, Google executed an online "soft launch" of the Nexus One, a very different go-to-market strategy compared to Verizon's launch of Droid, on which it spent a record-breaking $100 million on marketing, including aggressive TV advertising spends. Instead, Google chose to market and sell the device to consumers directly through its own website. While this distribution strategy is among the most innovative facets of the Nexus One launch, and a threat to carrier control of the consumer relationship, a series of customer service and other mistakes reveal Google's lack of retail experience. Further, Google chose to launch its Nexus One after the holiday season. While selecting this launch time may have been designed to avoid competing unnecessarily with its carrier and OEM partners over the all-important holiday season, this also adversely affected sales.
Additionally, T-Mobile, Google's carrier partner for Nexus One, did not provide the same carrier co-marketing support as it did for the myTouch 3G launch. Cannibalization may also be playing a role as the Nexus One competes against the myTouch 3G for any new T-Mobile customer. In effect, sales are now split between the two handsets. And while Google, in an effort to avoid channel conflict with T-Mobile, appears to have set the direct-to-consumer price for the handset at over $500 dollars, the high price point combined with the fact that the handset is only considered an "evolutionary" improvement over previous Android devices, indicates that Google did not take the steps to maximize first week sales. This is especially evident when one considers that among the most expensive costs associated with the launch - marketing - has not been incurred, and could have been applied to lowering the direct-to-consumer price point.
With each consecutive Android launch, consumers are enjoying more choices in the market. The flipside of this, however, is that it will take increasing innovation and decreasing price points to attract new smartphone consumers. Further, for Android to continue to chip away at Apple's third-party app developer support - key to delivering consumers more value - it needs to aggressively grow the Android device installed base. Only then will application developers more fully support Android.
Posted by Peter Farago on Mon, Dec 28, 2009
Flurry evaluated download growth driven by Christmas across the leading Apple and Android devices, as well as their respective app stores, pulling a sample that represents approximately 10% of all download volume in the App Store and Android Market.
iPod Touch Downloads Explode on Christmas Day, Surpassing iPhone for the First Time
Flurry revealed the significance of iPod Touch to Apple's future plans in its November Pulse report. Out of the estimated 58 million iPhone and iPod Touch devices in the market at the time, Flurry estimated roughly 40% of those, or 24 million, were iPod Touch devices. It appears that an influx of new iPod Touch devices has flooded the market over Christmas, and that users of the handset, primarily pre-teen and teen audiences, are voracious downloaders. Here are some stats:
- App downloads on iPod Touch soared past iPhone for the first time, eclipsing iPhone downloads by 172%.
- iPod Touch 3G downloads increased by more than 900% on Christmas Day, compared to the average of all previous Fridays in December.
- Total iPod Touch downloads (all generations) jumped by over 1000% on Christmas Day, indicating that in addition to new iPod Touch 3Gs coming into the market, iTunes gift card giving may have driven downloads to older generation iPod Touch devices.
The chart below sets iPhone download volume at "1" for iPhone on Christmas day to allow relative comparisons. All other dates for iPhone and iPod Touch are normalized against this figure. Compared to iPhone app download volumes on Christmas, the iPod Touch exceeded iPhone app downloads by 172%. iPod Touch download volumes increased by nearly 1,000% on Christmas day (which fell on a Friday) compared to the average of all previous Fridays in December. On December 26, iPod Touch download volumes continued to exceed that of iPhone by 104%.
December Shatters App Store Download Records
A month ago, November had set previous download volume records, growing by 15% over October. Toward the end of November, Flurry forecasted that December download volumes in the App Store would exceed November by more than 20%. With the figures in, Flurry underestimated growth by more than half.
- App Store download growth increased by more than 50% in December* over November.
- Android Market Growth increased by over 20% in December* over November.
*Flurry used December actual tracked downloads through 12/26, and completed the month by using an average daily download figure to estimate 12/27 - 12/31.
Droid Leads Android Downloads for Christmas, but Android Market Trailing App Store
Android devices also showed growth during the Holiday season, led by the Motorola Droid.
- Droid application downloads increased by 93% over previous Fridays in December.
- Droid accounted for 48% of download volume across the leading Android handsets (Droid, myTouch 3G, G1 and HTC Hero).
- App Store download volume is more than 13 times greater than Android Market.
Posted by Peter Farago on Wed, Dec 09, 2009
Consumer spending during the holiday retail season, beginning with Black Friday, is among the most important predictors of U.S. economic health. Since the late 90s, tracking online sales of websites like amazon.com on the first Monday after Thanksgiving, Cyber Monday, has become a second important barometer. The National Retail Federation, the world's leading retail trade group, extrapolated that total spending for this year's Black Friday "weekend," Thursday-to-Sunday, was up 0.5% from a year ago. Additionally, Lazard Capital reported Cyber Monday sales were up strongly over last year, by 35%.
As we enter the holiday season, downloads in the iPhone App Store can also serve as an indicator of consumer spending. While App Store sales are small relative to online and retail, Apple's September announcement that the App Store surpassed two billion downloads demonstrates how quickly this digital market is growing, having doubled in just the last four months. Further, according to Admob, the App Store is already generating over one billion USD in annual sales. Finally, the iPhone OS installed base, which sold more than 12 million units world-wide for the quarter ending September 2009, is reaching meaningful critical mass. Flurry estimates that, life-to-date, more than 34 million iPhone and iPod Touch devices have been sold in the U.S. through the end of September 2009. This equates to roughly 10% of the U.S. population.
Monitoring application downloads tracked by Flurry over the last six months, we observe strong patterns of seasonality and an aggressive ramp toward the holiday season. Note that because the iPhone installed base grew so dramatically between last year and this year, we have selected a time series trend analysis versus a year-over-year comparison. The chart below reveals three phases: first, strong summer downloads; second, a dip in September Flurry attributes to back-to-school; and third, strong growth over October and November leading up to the holidays. Specifically, October downloads exceeded September by 30%, and November further grew over October by an additional 16%.
Historically, the week after Christmas has been the strongest for data downloads to mobile phones, since consumers load up after receiving new handsets as holiday gifts. With download growth at its current rate, Flurry predicts that December downloads will exceed November by at least 20%, making it a strong season for Apple.
Posted by Peter Farago on Sun, Dec 06, 2009
The data in this report is computed from a sample size of over 3,000 applications, 45 million consumers and 4 platforms: Apple (iPhone and iPod Touch), Blackberry, JavaME and Google Android. Each day, Flurry tracks over 15 million end user sessions across apps that have included its analytics solution.
Apple's Weapon of Mass Consumption: iPod Touch
The highly publicized launch of Droid last month marked a major effort by Google, Verizon and Motorola to slow the iPhone's growing power in the marketplace. And while the Android platform is the most legitimate challenger to iPhone smartphone dominance, it's important to remember that the iPhone's flank is protected by an often overlooked, powerful fighting brand: iPod Touch. According to Apple, 58 million iPhone OS devices have been sold worldwide through September 2009. Of those, Flurry estimates that just over 40%, around 24 million are iPod Touch devices.
While it is clear that the iPhone has significant short-term revenue value for Apple, Flurry believes that the iPod Touch holds more long-term strategic value for Steve Jobs and team. As all industry eyes look to the iPhone, the iPod Touch is quietly building a loyal base among the next generation of iPhone users, positioning Apple to corner the smartphone market not only today, but also tomorrow. In terms of Life Stage Marketing, the practice of appealing to different age-based segments, Apple is using the iPod Touch to build loyalty with pre-teens and teens, even before they have their own phones (think: McDonalds' Happy Meal marketing strategy). When today's young iPod Touch users age by five years, they will already have iTunes accounts, saved personal contacts to their iPod Touch devices, purchased hundreds of apps and songs, and mastered the iPhone OS user interface. This translates into loyalty and switching costs, allowing Apple to seamlessly "graduate" young users from the iPod Touch to the iPhone. For OEMs hoping to challenge Apple, we believe an even greater sense of urgency must be adopted.
The chart below shows Flurry user sessions tracked across iPhone, iPod Touch and Android for the last six months. Over this period of time, the iPod Touch has gained four points, despite its already large installed base. While iPhone continues to grow in user sessions, its share of sessions has dropped, while iPod Touch and Android have increased as a percentage.
Even more powerful for Apple are the consumption patterns Flurry is detecting among the iPod Touch demographic, demonstrating this segment's power as a word-of-mouth promotional army. Anecdotally, we know the "iPod Touch Generation" is made up of heavy MySpace, Facebook and SMS users, who voraciously share their lives with, and influence their ever-expanding social graph. Importantly, this also includes promoting products they like. Empirically, Flurry compared how iPod Touch session usage has changed over the last six months across key application categories important to this demographic; namely, Social Networking and Games. While Social Networking's viral nature is understood, iPhone Games have become increasingly social with the inclusion of features like friends lists, leaderboards and remote multi-player modes. Together, Social Networking and Games category usage reflects the strength of the iPod Touch Generation's influence among its peers. As this segment increasingly migrates its social habits to smartphones, Flurry data shows that the iPod Touch is the largest beneficiary. The graphs below illustrate how total session growth on iPod Touch for Social Networking and Games categories is outpacing that of iPhone and Android.
Manga Stomps on to iPhone Faster than You Can Say "Godzilla"
The origin of Manga, Japanese comic books, is commonly traced back to the 18th century in Japan. Since then, the Japanese comic book industry has become not only an integral part of Japanese culture, but also a $3.6 billion industry. Visiting Japan today, one can observe people of all ages reading Manga in subways, cafes and other public venues. The export of Manga to other parts of the world first began around World War II, and then accelerated in the 1970s. Among the most recognized figures in Japanese popular culture, Godzilla has also starred in several of his own Manga books.
The iPhone, which debuted in Japan during July of 2008, initially sold poorly for many reasons described by Wired in "Why the Japanese Hate the iPhone" With the release of iPhone 3GS in June 2009, however, Apple has gained hard-fought ground in a market that boasts many of the world's most advanced smartphones. According to StrategyEye, the iPhone 3GS became the top-selling device in Japan during its first week. Over its first three months, Analysts estimate that well over 1 million iPhone 3GS units were sold in Japan. The result is that the iPhone platform is attracting a wave of support from Japanese developers.
Studying content distribution on the iPhone, Flurry is detecting the rapid infiltration of Manga on the platform. Flurry first described the phenomenon of iPhone as an eReader in an article entitled "After Playing Games, iPhone Gets Serious about Books" in its October 2009 Smartphone Industry Pulse report. Because comic books like Manga lend themselves more to brief sessions of reading than traditional books, especially with their rich graphical treatments, it makes sense that Manga is expanding aggressively to the iPhone.
The graph below shows the number of books released by a major Japanese Manga publisher to the iPhone App Store since July 2009. Note that the rapid release schedule comes just after the successful June 2009 launch of iPhone 3GS in Japan. With an aggressive ramp, this single publisher is already releasing more than five Manga books per day. We can expect this kind of content, well suited for the iPhone to continue to expand faster than Godzilla stormed Tokyo.
Posted by Peter Farago on Mon, Nov 16, 2009
There is a lot riding on the Motorola Droid. Verizon is looking for an answer to the iPhone, which has driven enviable data ARPU growth for AT&T. According to Rita Chang of Ad Age, the Droid is supported by a $100 million integrated marketing campaign, the largest in Verizon history, running through the end of 2009. Google's long-term bet on mobile, underscored by its recent $750 million offer to purchase Admob, demands that the Android OS propagate. Meanwhile, HTC enjoys an early mover advantage with its G1 and 1.5 generation of Android handsets. Finally, several more leading OEM's have pledged to support Android, with as many as 100 handsets scheduled to ship in 2010. In short, the once dominant, now reinvented Motorola has little room for error.
Through its analytics service, Flurry monitors usage of over 10,000 developers' applications on iPhone and Android. In total, Flurry tracks applications on approximately two out of every three unique iPhone and Android handsets in the market, including over 15,000 million user sessions per day. To estimate first week sales totals for the myTouch 3G, Droid and iPhone 3GS, Flurry detected new handsets within its system, and then made adjustments to account for varying levels of Flurry application penetration by handset. Flurry additionally cross-checked its estimates against Apple actual sales, released for the iPhone 3GS, which totaled one million units sold over the three days of sales, Jun 19 - 21. Flurry first week sales estimates can be found in the table below.
While Flurry estimates Apple sold approximately 1.6 million 3GS units over its first week of sales, it is important to note that Apple simultaneously launched its device across eight countries (U.S., Canada and six European countries), while the Droid launched only in the U.S. Additionally, the iPhone commanded a strong installed base of over 25 million at the time the 3GS launched. Of those, over 6 million were first generation iPhone users who were expected to upgrade to the 3GS. Taken in this context, Droid sales of 250,000 units during its first week from a standing start and in just one country, is a strong result for Motorola and Verizon. Also, by Flurry's measurement Android does have an edge over iPhone app usage, with the average Android session length at four minutes vs. two minutes for iPhone apps.
With its first week showing, the Droid is the fastest-selling Android phone to date. Compared to the myTouch 3G on T-Mobile, Droid outsold it by more than four times. Of course, Verizon has nearly 90 million subscribers to T-Mobile's 34 million and Verizon has shown a willingness to outspend previous carriers with its $100 million campaign. With Motorola forecasting its own Droid sales at one million through the end of the year, that equates to a cost per acquisition of $100 per handset sold. Verizon's aggressive campaign coupled with its 3G network advantage in key, populous regions of the country like the Northeast positions the Droid as a legitimate challenger to the iPhone.
While iPhone continues to dominate the Smartphone market overall, each subsequent Android handset launch increases competition for Apple. Furthermore, Flurry has monitored a sharp increase in new Android project starts by application developers within its system, a 94% jump in October compared to September. The launch of Droid signals the beginning of a viable platform alternative to the iPhone as Android builds critical mass. As major companies continue to vie for a piece of the exploding Smartphone market, the consumer has never had more choice and innovation in the mobile industry. With Droid, Motorola has raised the bar for Android handsets, contributing to an ever-growing base of Android handsets upon which applications developers can build a business.
Posted by Peter Farago on Sun, Nov 01, 2009
The data in this report is computed from a sample size of over 2,500 applications, 40 million consumers and 4 platforms: Apple (iPhone and iPod Touch), Blackberry, JavaME and Google Android.
After Playing Games, iPhone Gets Serious about Books
The iPhone is a versatile multi-media device that has already significantly impacted the business models of music, games and other Media & Entertainment industry categories. In particular, since Apple launched the App Store in July 2008, game developers have flocked to the iPhone, creating an alternative for consumers to the leading handheld gaming platform, Nintendo DS. In Nintendo's October 29 earnings call, the company cited iPhone competition against its DS as one of the reasons profits fell by more than half last quarter, from 133 billion yen a year prior to 64 billion yen, or $709 million.
To predict which sector of Media & Entertainment iPhone might next impact, Flurry researched the number of applications released to the App Store, by category, since its inception. From August 2008 to August 2009, more apps were released in the Games category than any other. This September, however, we observed another category, Books, usurping Games for the first time ever. To illustrate the surge in the supply of books to the App Store, the chart below compares the number of books and games released to the App Store per month, over the last four months, as a percentage of all released applications.
In October, one out of every five new apps launching in the iPhone has been a book. Publishers of all kinds, from small ones like Your Mobile Apps to mega-publishers like Softbank, are porting existing IP into the App Store at record rates. Flurry first evaluated the iPhone as an eBook reader in its July Pulse ("You Trying to Swindle my Kindle?") where it looked at consumer demand for eBooks. In that report, we observed that during the month of August 1% of the entire U.S. population was already reading a book on the iPhone. Now, with books shipping in droves, we are seeing the supply-side explode.
The sharp rise in eBook activity on the iPhone indicates that Apple is positioned take market share from the Amazon Kindle as it did from the Nintendo DS. Despite the smaller form factor of the display, we predict that the iPhone will be a significant player in the book category of the Media & Entertainment space. Further, with Apple working on a larger tablet form factor, running on the iPhone OS, we believe Jeff Bezos and team will face significant competition.
Addicted to iPhone Apps? There's an App for That.
In its August Pulse report, Flurry reviewed consumer loyalty by looking at how long and how frequently consumers used their downloaded applications. This time around, we're escalating the conversation from retention to outright addiction. The chart below depicts growth of what we call the "Addict" segment, consumers that use an application more than 100 times per month, or more than three times each day of the month. These are the most active users Flurry tracks, and they fire up their applications more than 10 times more often than the average user, who access their applications around 8 times per month.
The graph above shows significant growth in the Addict segment over the past six months. In September, 1.2% of the more than 40 million users Flurry tracked, or roughly one half of a million, used apps more than 100 times per month. Unrelated to Flurry's finding, a Rubicon Consulting survey found that one in ten iPhone users reported pain or numbness in their fingers. Perhaps there is a correlation between usage and physical side-effects. Either way, there is no denying the level of addiction iPhone users are demonstrating around app usage.
Posted by Peter Farago on Thu, Oct 15, 2009
In this analysis, Flurry looks at user retention by international territory. As the App Store expands internationally, studying differences between user behavior across territories is becoming more important. Increasingly, app developers are faced with international market expansion decisions, and need to consider the cost of localizing and promoting an app in a new territory against the value of capturing those new users. While any developer using Flurry Analytics can track usage by country for their own applications, we wanted to share a global snapshot of data we've collected from more than 200 countries to provide some helpful context.
Taking a cut of data by location from January through August of this year, we build out the map graphic below. The total data set contains data from approxately one billion tracked user session, ranging between millions to hundreds of millions per geographic territory represented. Flurry measures user retention by the number of users who downloaded an application, at any time in the past, and used that app within the last seven days. The global average for user retention is 14.8%.
Before our analysis, we expected to see users in developing economies, which have less wire-line infrastructure and use phones more as PC-substitutes, show higher app retention rates. This hypothesis held true. Regions that can be characterized as developing economies have above average retention rates: Africa (21%), Central America (16%), the Middle East (15%) and South America (15%). Whereas more developed economies show lower-than-average retention rates: North America (12%), Europe (12%), Asia (13%) and Australia (14%). It's worth noting that our sample for Asia is made up primarily by more advanced economies including Japan, Hong Kong, Singapore and Russia.
In particular, we find that North America and Europe have the lowest retention rates. Because these two markets represent iPhone's home-base, which comprises a large part of our sample, we reason that the sheer number of available apps in the App Store generates more churn as consumers are presented with increasingly more choices. We first discussed the relationship between consumer choice and retention in Flurry's June Pulse Report, where we compared iPhone vs. Android retention and found that Android users demonstrate higher app loyalty, but also have far fewer choices in the Android Market compared to that of the App Store. Finally, we believe that higher disposable income levels in developed economies allow consumers to try and abandon (paid) apps more feely.
Posted by Peter Farago on Fri, Sep 25, 2009
This article comes from the Flurry Smartphone Industry Pulse, August 2009.
The data in this report is computed from a sample size of over 2,00 live applications and over 200 million user sessions tracked each month across Apple (iPhone and iPod Touch), Google Android, Blackberry, JavaME platforms.
Understanding Mobile App Retention: They Use or You Lose
With more than 75,000 applications in the App Store, consumers have a vast choice of alternatives to the applications they have already downloaded. And while discovery of new applications is a challenge for consumers, retaining users can be equally difficult for developers. To shed light on the kinds of applications that tend to be used over a longer period of time, Flurry studied user retention across 19 categories over a 90-day period. We monitored if consumers returned to use a downloaded application within 30, 60 and 90-day periods, as well as how frequently consumers used applications over those time periods. Flurry measures user retention by the number of users who downloaded an application, at any time in the past, and used that app within the last seven days.
Reviewing the chart on the previous page, Quadrant I is comprised of the most frequently used apps over the longest period of time; categories like News and Reference (e.g., Dictionaries, Thesauruses, Recipes, etc.). Thinking about News apps, this makes sense given that news content is constantly being refreshed, providing consumers nearly infinite value over time. This logic continues to hold up when we consider that news apps get re-used more than once per day, at a rate of 11 times per week.
On the other end of the spectrum, in Quadrant III, we find the Entertainment category, which could better be described as a collection of "gimmick" apps (think Lighter, Fart, IQ Test and Ringtone apps). Once downloaded, these apps are typically used only a few times and then abandoned.
In Quadrant II, we find categories like Books and Games, among the two largest app categories in both the App Store and Android Market. These application categories are characterized, on average, by intense usage over a finite period of time. Because games and books offer content that typically is consumed only once, the user usually moves on after reading a book or finishing a game.
Finally, Quadrant IV contains Productivity (e.g., List, Drawing, Wi-Fi Finder apps), Navigation and Medical apps. These kinds of apps remain on a consumer's handset for a long period of time, but get used only occasionally. Unlike "gimmick" apps, they are perceived as having sustainable value and therefore consistently revisited over time.
Mapping categories by usage frequency and retention also provides insights into pricing models. Quadrants I and IV (the right-hand side) are better suited, on average, to subscription (if supported by the respective app storefront) and advertising-supported models. The main reason is that these apps have perceived enduring value by consumers over a long period of time, and therefore more successfully retain their user bases. For ad-supported apps, this high repeat usage translates into more ad impressions served. Categories on the left-hand side, Quadrants II and III, are better suited for one-time download fees. Those apps may provide higher immediate satisfaction to users but their content, once consumed, rapidly loses their value.
For more data on retention by category, as well as frequency of use, we provide the chart below:
Posted by Peter Farago on Fri, Aug 21, 2009
In Part I of this series, Indie iPhone App Developers, we explored the breakdown of new vs. established developers in the App Store, focusing on the largest App Store category, Games. Evaluating over 10 months of data, we concluded that new entrants outrank incumbent mobile game developers in the top paid games category, and with no signs that established game publishers are gaining ground. We call this new group of developers the New Middle Class.
This blog post further explores how key changes in the ecosystem, driven by Apple, have enabled the growth of the New Middle Class. Simply put, a year ago, the new darlings of mobile gaming - companies like Bolt Creative (Pocket God), Backflip Studios (Ragdoll Blaster, Paper Toss), Storm8 (World War, Racing Live) and Firemint (Flight Control, Real Racing) - could not have flourished in mobile.
At the highest level, this can be explained by friction points in the industry that included significant development and porting costs, impossible distribution challenges and rampant consumer risk. If a game maker did not license a big brand, they were basically dead on arrival. Very few companies, most notably Digital Chocolate, were able to survive this era of mobile, but largely due to a formidable streak of exceptionally innovative and well-made games.
With the iPhone and App Store, Apple has leveled the playing field for garage developers. In today's mobile world, an indie game maker can invent an original game, distribute it and compete with the likes of Electronic Arts and Gameloft. In other words, content is king again, and it doesn't need to be licensed. With that in mind, our analysis focuses on original vs. branded content in the gaming category.
Hypothesis: With reduced friction to get into the App Store, and less friction for consumers to try and buy games, original games compete more effectively against branded games in the App Store vs. carrier decks.
Baseline: In July, Flurry compared top selling games in the App Store vs. the Media Mall, the AT&T managed storefront. Specifically, we looked at the breakdown of original vs. branded titles, and present these in the table below.
A quick inspection reveals that branded content dominates the traditional carrier store front. Out of 25 titles, 20 of them are branded (80%). However, in the App Store, original titles hold roughly two thirds of the Top 25 slots (17 of 25, or 68%). Even more striking is a comparison of games that are both branded and shipped by established companies. In this case, we find that AT&T's store front has 3.5 times as many branded titles by established companies versus the App Store (20 vs. 6, or 80% vs. 32%).
Test: To ensure July's snapshot accurately reflect the success original games have on the iPhone, Flurry took a mid-month snapshot of the Top 25 App Store Top Paid Games category from September 2008 through July 2009. We then sorted games into two categories: (1) original titles created just for the iPhone; and (2) existing brands, whether licensed (e.g., movies, sports, music, board games, etc.) or ported from other platforms (e.g., social networks, classic arcade, web, console, PC, etc.). We tallied the results and generated the following charts.
Conclusion: When it comes to the Top 25 Paid Games on the iPhone - the largest App Store category - Original games dominate Branded games by a ratio of nearly 3:1. Further, compared to the kind of companies appearing in the Top 25 games (55% New vs. 45% Established), covered in Part I of the New Middle Class series, Original titles trump Branded titles by an even wider margin (72% vs. 28%). This can be attributed to the fact that established companies also ship original titles, and some of these rank better than their branded counterparts.
Apple can be credited with enabling the Rise of the Middle Class in two historical, groundbreaking ways. First, Apple provides the most egalitarian access for all developers who want to sell apps in the App Store. Love or hate the App Store submission process, it is worth remembering that only the most privileged, dogged or lucky companies were granted access to the carrier decks. And while the number of available games now totals more than 10,000 in the App Store, most carrier decks listed no more than several hundred games at a time, regularly sun-setting any title that "under-performs." Second, Apple has significantly reduced the amount of risk that consumers face when trying and buying new games on the iPhone. The App Store provides rich point-of-sale information (e.g., long descriptions, screenshots, videos), has enabled free trial, provides a forum for consumer reviews and has created an efficient market whose equilibrium outputs lower price points. By stark contrast, carriers set minimum pricing around $4.99, frequently blocked free trial, provided no voice for consumer reviews, and as described above, offered minimal information about a game a consumer might consider purchasing.
The App Store has created a level playing field, enabling a steady stream developer Cinderalla stories. Unlike the carriers, previously charged with managing mobile store fronts, Apple has provided more choice to consumers while simultaneously empowering them with all the tools to make informed decisions. The resounding result is that indie developers are thriving in mobile like never before.
In Part III of the New Middle Class series, we study developers and games in the Android Market.