With the rise of app Stores like Apple's AppStore, Microsoft's Windows Marketplace, Nokia's Ovi and others, let us explore whether most apps are just fun distractions or whether there is a solid business and revenue opportunity behind them so businesses can make money from iphone apps.
Since Apple launched the App Store in July 2008, game developers have flocked to the iPhone, and as a result a majority of the 100,000 apps available for download are game-related. Some have been overnight successes like iShoot and Trism generating substantial revenue from their $2.99 download charge, enabling developers to carve out new opportunities in an already saturated market.
The iPhone quickly became positioned an alternative handheld gaming device, squeezing Nintendo's profits, which fell by more than half last quarter. The company cited competition from the iPhone as the main reason for the fall. It's not hard to see why, when from August 2008 to August 2009, more apps were released in the games category than any other. This September, however, book apps are surpassing games for the first time ever, as the iPhone rivals ebook readers such as the Kindle.
Instead of sitting back and waiting to see which sector the iPhone will next have an impact on, brands need to be exploring how they can tap into this exciting medium to not only protect their existing revenues and market share, but to also develop additional revenue streams.
To develop an app that has the potential to make you money, there are many issues to consider before your strategy will make money from iphone apps.
Before you start the development of your app you need to ask yourself the most important question of all - will people pay money for it? If your app is just something that you're building for fun, then it doesn't need to be financially viable. If it turns into something valuable in the future, then great. Delicious is a good example of this.
However, if you're putting a lot of time and money into developing your app, you need to have a solid financial model beneath it.
To date, selling an iPhone application required a few simple decisions: you could either give it away for free or charge for it. The two most common business models to emerge were free-to-paid and ad-supported, with some companies opting to ship only paid version of their applications.
The decision to offer a free version seems to be determined by how well known the brand is. For example, EA Mobile, which boasts The Sims 3, Tetris and Scrabble tends to release more paid-only versions. By contrast, companies with more original, less-recognisable titles frequently go to market with free trials of their games to entice consumers to try-and-buy.
Whilst there has been a lot of research done into paid v free apps, it seems both can be successful at generating revenue through basic execution: a great concept, a good user experience, tight marketing and a smart distribution plan.
There are a couple of ways to make money from iphone apps using free apps. Freemium content - offer a demo / freeware version of your app which then upsells to a fully paid version. This has the advantage of encouraging consumers to download the app with a full understanding of the costs involved.
In application advertising - tried and tested by people like Greystripe, HOvr and others. Feature ads running either in a wrapped manner (loading and exit screens of the app) or integrated within the app. Money is split between the technology provider, the content owner and the carrier (if they are distributing).
In a nutshell, just because it's free doesn't mean you can't make money from it.
The ability to offer in-app-purchases within paid iPhone apps, as part of iPhone OS 3.0, creates exciting new revenue opportunities. At the same time, the option to sell virtual goods, content, subscriptions and other forms of micro-transactions, creates more complexity around how to best monetise a given application.
Already, there are several iPhone apps well suited to micro-transactions. To stay relevant, well ranked, and retain consumers, brands need to add extra content that they can start to charge for. By considering charging for content packs, individual items, new features or subscriptions, brands could stand to increase revenue significantly.
By quickly and effectively measuring and optimising the impact of these new pricing options and putting in place a strategy, these brands will emerge as winners in the next phase of the iPhone economy and make money from iphone apps quickly.
Unfortunately you can't just create your app and put it in the App store and hope it sells. Although still a relatively new industry, marketing of apps is becoming more important as competition and "noise" increases. To make money from your app, you'll need to devise a solid strategy to market successfully, and that starts with understanding your target audience and explaining the benefits or value of your app in terms they'll understand. This messaging then need to be placed where they are most likely to see it; whether that's on your website, in press releases, through social media, etc.
Companies must also leverage every customer contact point to increase sales. This is where cross-selling can help. On the iPhone, the best opportunity is from within a downloaded application, usually with a link to other games or applications included on the menu screen. Also, allowing a consumer to quickly and easily complete a follow-on purchase, can be tracked, measured and tuned for maximum impact.
We suggest making sure your applications work with Google Android, Windows Mobile, Symbian and Blackberry to ensure a wide reach and improved revenues. Relying on just the Apple App store to sell your app, and reach all possible consumers can create major difficulties as you try to make money from iphone apps like putting all your eggs in one basket.