Why are mobile application sales dropping?

The e-mail was from the CEO of a prominent mobile app developer, a company you've heard of if you're familiar with the mobile space. He makes software for a broad range of mobile devices – Palm OS, Windows Mobile, Symbian, etc. He told me that his overall application sales are disturbing:

"Companies like us (I've checked with a few others) have seen our market flatten or worse in 2005, especially in the 2nd half. While a simple example might be that this is due to new devices being late to the market...I keep wondering whether this might not be some deeper-rooted trend. I'd be delighted to hear about your view of our market (niche?) and its current dynamics."

Since then I've talked with a number of mobile developers, and heard eerily similar stories. Sales are stagnant to down, and the problem's not just focused on one OS. At one point I talked with the folks who run the Palm Entrepreneurs Forum to see if they'd be willing to let me survey their members, to confirm the problem. (PEF is an online forum for developers of software for all mobile devices, not just Palm OS. Their mailing list is highly recommended if you're running a small mobile software company. A lot of smart people hang out there, so I thought they'd be a good starting point.)

But the PEF folks told me, "Don't bother doing a survey. Everyone knows it's true." And sure enough, if you poke around on the web, you can find a lot of commentary raising questions about the viability of the mobile data market.

The situation was a big surprise to me. I knew from my time at PalmSource that many Palm OS developers weren't happy with their sales. No shock there. Palm OS hardware sales have been consolidating for a couple of years – Sony withdrew from the market, Handspring and Palm merged, Samsung hasn't done a new Palm OS phone in a long time, and several other Palm OS hardware vendors quietly withdrew from the market.

But I had thought it was just a Palm OS problem. Not so, the developers told me. They said application sales on Windows Mobile and Symbian are also stagnant, and although some developers report an increase in sales of RIM applications, the increase is on a very low base, and is not enough to offset the declines elsewhere.

It seems bizarre that this would be happening. The consensus among the industry analysts is that smartphone sales are rising sharply. Since the definition of a smartphone is that it can accept third-party applications, sales of those applications ought to be going up as well.

In some cases they may be doing so – the developers I talk to are not Java houses making simple add-ons like games and ringtones. There are anecdotal reports that sales of those are going pretty well. What I'm talking about is sales of more substantial applications, generally written to run native on the device's operating system. If the phone is becoming a multimedia computer, as some vendors claim, sales of these more sophisticated applications ought to be booming.

So why aren't they?

Before we can tackle that question, we need more data on device sales. Unfortunately, that's in very short supply. Three companies (Canalys, Gartner, and IDC) publish quarterly reports on shipments of handhelds and smartphones. Unfortunately, most of the information they collect is sent only to their paying customers, other than a teaser press release with a few statistics in it. Those press releases are not even issued every quarter, so there are gaps in the coverage. And the numbers themselves are not high-quality because they're just self-reported shipments into the channel. Vendors could lie, and even if they tell the truth all you know is what they shipped, not what the stores actually sold.

Nevertheless, these are the best numbers we have. By combining the Gartner, IDC, and Canalys numbers, and doing estimates to fill in a couple of gaps, I built the chart below. It shows estimated worldwide unit shipments of handhelds and smartphones, by quarter, for the last two years.


Quarterly worldwide unit shipments , in thousands.

This is one of those "stand back and squint" charts. Don't sweat the details of why a category went up five percent in one particular quarter – chances are that's a statistical anomaly. Look at the broad trends over the last two years.

A couple of notes on drawbacks of the chart:

--It's not possible to get an accurate estimate of quarterly Windows Mobile shipments, because the press releases don't report shipments by OS every quarter. They report by hardware vendor, and only the top five vendors are shown. The rest are lumped into "other." Most of Microsoft's licensees are smaller hardware companies that don't show up in the top five (even HP hasn't consistently been a top five vendor).

--I had to make some educated guesses about shipments of Symbian devices in Japan, because they sometimes make the top five and sometimes don't.


Despite these problems, it's possible to form some conclusions from the data:

--Total shipments of handhelds (Palm OS and Windows Mobile) are dropping steadily. Big duh, we all knew this.

--Total shipments of Palm Treo devices are growing, but not enough to offset the decline in handhelds.

--Total Palm OS + Windows Mobile + Other shipments have been declining on a year-over-year basis since Q2 of 2005.

--All of the year-over-year unit growth is in RIM and Symbian.

So it's not really accurate to say that the smartphone market is growing. The Symbian market is growing, the RIM market is growing, and everything else is flat to down.


What it means to third party application sales

I think there are three problems.

The first is that the two platforms that had been driving the most app sales, Palm OS and Windows Mobile, are not growing in total. The sales mix is shifting between them, but when you add everything up their overall sales are not increasing. That means we're selling more replacement units to the installed base rather than units to new users. Existing customers already have apps, so application sales drop.

The second problem is that as the mix of devices shifts from handhelds to smartphones, I think application downloads become less attractive. If you had a handheld, it was pretty clear that you could add more software to it, and since you synced it with a PC all the time it was fairly easy to get and install new applications. But a smartphone feels more complete – it has a lot more software bundled on it (in some cases more than you can use). Microsoft has also shifted much of its sales mix (we don't know how much) to devices that don't have touchscreens. On these devices it's harder to use some classes of mobile applications, and some Pocket PC apps simply won't run on smaller, non-touchscreen devices. Also, smartphone users are much less likely to sync to a PC than their handheld counterparts, and without regular syncing it's a lot more difficult to find and install apps.

The third problem is that application sales haven't tracked the growth of some of the smartphone platforms (in particular Nokia S60, which is producing most of the reported growth in smartphones). The CEO who wrote to me compared his sales of S60 apps to UIQ applications (UIQ is the user interface used on the SonyEricsson p900 series of smartphones):

"We have Symbian Series 60 and UIQ versions since 2004. Even though S60 outsells UIQ at least 10:1, our UIQ version out-sold S60 10:1 – 5:1, and that's pretty constant across the industry. Most S60 phones have not been marketed to end-users as smart-phones and therefore their clientele is not smartphone clientele."

When I was at PalmSource, we surveyed users of Nokia S60 devices, and most were unaware that there was even an OS in their phone, let alone that they could add applications to it. They just thought it was a multimedia phone. I know Nokia's trying to change that, and they've made some progress, but given what the starting point was I'm not too surprised when developers say they haven't seen heavy sales of native S60 apps.

(Note that I'm not trying to beat up on S60 in particular here; the developers I talk with are disappointed by every platform.)

If you add up everything that's happening, it's a lot easier to understand why many mobile app companies are depressed:

--Palm OS and Windows Mobile, taken as a whole, are not growing. That probably accounts for the decline in app sales on those platforms.

--Smartphones in general are less likely than handhelds to drive app sales. The more handhelds are cannibalized by smartphones, the tougher the application sales process becomes. This would worsen the effect of the flattening demand for Palm OS and Windows Mobile.

--The platform that is producing lots of smartphone growth isn't currently a big driver of sales of sophisticated apps.


What do we do about it?

The CEO who wrote to me put the question very well:

"Is the market shrinking? Is it saturated? If so – why? Are these devices really irrelevant to the "rest of the world"? Are they not as useful as we all thought they were 5 years ago? Or is it something else altogether? Strategically, I have to wonder whether this is a hiccup in the market, or is this what we're going to see moving forward."

I wish I could say it's just a hiccup, but the evidence points more toward a change in market structure plus saturation of the core market that had been buying Palm OS and Windows Mobile devices.

That doesn't mean we should all give up, but I think there will need to be some changes in the market before mobile app sales will really take off again. As a couple of mobile developers told me recently, "we need a new platform." I'll write about what I think that means, and the prospects for it, next week.

____________________

Many thanks to the folks at All About Symbian for including my post on Sprint's 3G smartphone in the latest Carnival of the Mobilists.

37 comments:

Rafe said...

Nice post. I think part of the problem also comes from defintion of a handheld / smartphone / pda. Definition boundaries are a big issue when doing this sort of analysis even within platforms. A device like the E61 is different from say the N70 will attract different people who have different software buying habits (in this instance I think E61 owners may buy more software). All mobile software development gets lumped together.

However I don't really think you can compare software sales for say S60 smartphones with PDAs. I think the UIQ / S60 divide illustrates this nicely. UIQ evices up till now have essentially been PDAphones and have attracted PDA users. S60 phone have attracted normal phone users. The background these users come from is different.

For PDA users buying software is normal, for phone users the tradition is Java apps off the portal (of at all). I actually think this will chnage as we say a wider range of both S60 and UIQ devices.

Smartphone users are less liekly to buy more software because ultimately they have less needs than PDA type owners. This together with a lack of awareness of the platform potential is the issue.

Nokia did a smartphone 360 study which included information on application installs etc and for those that were doing the numbers were good. However the people in the study were naturally the more power user types... It does show the potential, but the issue of user education remains.

There is a similar different between Windows Mobile Pocket PC and Windows Mobile Smartphone (less because its better branded / marketed).

As you say the growth has not been in PDA's but rather smartphones. I would imagine Windows Mobile Pocket PC sales and Treo sales remain healthy - but now they are just a small portion of the smart mobile device market. Until people are better educated to think of their smartphones as computers I think software sales will be missing out on full potential.

I've talked to developers who are doign very well out of S60 / UIQ development, but nearly everyone says they missing out on the bigger market. (i.e. the only reason they can manage is because there are 50 million + Symbian devices, and even a small portion of those actively installing / buying software is a significant market).

I think the solution is a combination of time and marketing of the S60 platform (and other platforms too) - though for overall impact the issue is most accute for S60 given its market share / current position.

raddedas said...

Just posted on this here - I'd love to know what kind fo software all these companies are trying to sell?
Smartphones are a very small minority market which will generate a few niche requirements (business productivity, sysadmin tools etc) but outside of these I find it difficult to see why anyone would commit serious amounts of time and money to develop for them when compared to the wider J2ME market...

There are certainly a number of APIs available to smartphone programmers which require optional JSRs in MIDP, but I'd argue that if this seems too restrictive you should critique the original (overambitious?) idea rather than condemn MIDP and write for a limited minority market with no established effective distribution channels.

Sander van der Wal said...

Mmmm...

Part of the the problem, S60 buyers not being software buyers, was recognised more than a year ago, and I am not happy to see that it still exists. Or that it has become worse, actually. There are now more S60 devices on the market than there were ever before, both in absolute numbers, and relative to UIQ and Series 80. But apparently the number of S60 software buyers hasn't increased at the same rate.

Whether the problem is due to a lack of user education? On all Nokia S60 devices there were a number of apps in the "Try&Buy" package. There is a lot of info on buying apps in the box. More user education might help, but given the numbers, I would not be suprised if most of S60 users just don't care about buying software.

Michael Mace said...

Nice comments, folks!

Rafe wrote

>>I think part of the problem also comes from defintion of a handheld / smartphone / pda.

Oh yeah, especially the difference between a smartphone and a feature phone. Technically, a smartphone is a phone that can accept native apps (written to its OS), while a feature phone can only run sandboxed apps like Java or Brew. But the user doesn't understand the difference between various types of apps and shouldn't have to care.

What matters to a developer is, are the users of a particular phone eager buyers of add-on software? When you look at it that way, there are many millions of mobile data users in Japan and elsewhere in Asia who are officially classified as feature phone users but who are great customers for mobile data.

Meanwhile, a lot of people who are officially smartphone users in Europe and the US have no interest in mobile data -- they just thought they were buying a camera phone, and it happened to have a "smartphone" OS bundled on it.

Segmenting by technology is more or less useless. We should be segmenting by user. But that's hard and expensive to do, so none of the analysis companies do it.

Not that I'm frustrated about that or anything. ;-)


>>I would imagine Windows Mobile Pocket PC sales and Treo sales remain healthy - but now they are just a small portion of the smart mobile device market.

Correct. The problem (I think) is that it looks like sales of Treo and what we used to call Pocket PC Phone Edition are not rising fast enough to fully offset the decline in handheld sales. Or at best the total is flat.

Windows Mobile may be up overall (it's hard to tell), but I think a lot of those sales are "smartphone" products without touchscreens.


Raddedas wrote:

>>I'd love to know what kind fo software all these companies are trying to sell?

It's all over the map, but then in mobile data almost any app that's not a game or messaging tool is more or less a vertical niche. There just aren't a lot of horizontal categories in mobile data the way there are in PCs.

I agree with you that Java's a candidate to the the platform of the future, but to me a platform needs to have a unified set of consistent APIs.

You've made a nice start on your weblog, by the way. Pithy comments; reminds me a bit of the Register. It sounds like you want to stay anonymous, but do you care to share any hints on what company you're with or what you do there?


Sander wrote:

>>Part of the the problem, S60 buyers not being software buyers, was recognised more than a year ago, and I am not happy to see that it still exists.

I should be clear, I don't know for sure what the status is of S60 software sales. All I know is that the developers I talk to say it's not booming. Maybe I'm not running with the right crowd. Rafe says he's heard from some S60 developers who are doing well. That's fantastic.

My point here is not to beat up on S60 or any other platform. I want mobile data to succeed, and I don't really care who makes it happen. But I think that we as an industry have a problem with app sales, and before we can cure it we need to diagnose what the problem is. That's what I'm trying to do in this post.

I know how much excitement Palm OS generated among developers when its yearly device sales were much lower than yearly S60 shipments. Same thing for Pocket PC. No mobile platform is generating that sort of excitement and growth today, at least among the people I talk to.

Dean Bubley said...

My view is that the "smartness" of most smartphones (especially S60) is for the benefit of either the manufacturer (eg Nokia) or the operator (eg DoCoMo), not the end-user.

The vast majority of Symbian sales are made to people who either just want a high-end Nokia (and don't care about the OS), or to Japanese users (who can't install apps anyway as DoCoMo locks-down the OS).

Given that most people buy phones based on a plastic mockup nailed to a wall, they don't usually know (or care) whether it has Symbian, Windows or a hamster on a wheel inside it.

There is another issue at play as well - many smartphone apps deliver functions that can be performed for free on the Internet. As mobile speeds increase, it's much easier to do things on the web (or with web 2.0 tools) than downloading a specific app. It's the same in the fixed PC world - why buy a piece of mapping software any more, when you can use Google Maps for free online?

And I'm sorry to say it's not necessarily something that "user education" can fix. Most people just don't care. I know I don't. I've used smartphones for several years, and I've never bought a piece of software except a couple of times "to prove that I could". On the other hand, I use my T-Mobile MDA Vario constantly as an email and (pull) email tool.

One last point - I suspect the Windows Mobile numbers have ramped fairly quicly in the last 18 months, thanks almost entirely to HTC and its various channels.

Dean

Scott Miller said...

Just want to pile on a bit with Dean's comments - we've pretty much run out of users who find the OS.

(Mike - Here at Xinlab we love the Samsung phone you panned a few days ago. Why? It is a great development platform. Dean's point exactly...)

That said, I do not agree that browser-based applications on a phone are much use yet. Maybe someday. There is a price arbitrage issue in that carriers tax just about everything that crosses their gateways - not the case on the Internet. But browsers are not an equalizer yet.

Dylan Greene said...

1) Most of what is out there is crap. That turns users off. When a good program does come out, we're afraid of trying it.

2) Crappy sites to buy the software. You really think I can convince my boss that Handago is a good place to buy our software? Give us a business software portal with none of the crap on it.

3) Getting software on the device is too much work. Of all the people I know with Treo's - none of them have ever synced with their computers. Put the software catalog on the devices.

4) Crappy software that leaves a mess behind when you try to install it. This goes back to #1. Trial software is great, but not when it leaves behind shorts, empty folders, registry settings, and startup scripts. This is my pocket device - memory comes at a premimum - if you can't clean up after a trial install, I don't trust you enough for a full one.

Michael Mace said...

Cool! Another batch of interesting comments...

Dean wrote

>>Given that most people buy phones based on a plastic mockup nailed to a wall, they don't usually know (or care) whether it has Symbian, Windows or a hamster on a wheel inside it

Yup. It's up to the OS vendor to communicate to users why they should want the OS. If you don't do that, you can't expect the users to value it.

Years ago Palm came breath-takingly close to launching a major ad campaign, including TV ads, explaining the range of apps available for the OS. Then the tech bubble burst, and the first thing the company cut was the ad budget.

I wish those ads had been run. I really, really wish those ads had been run. Would they have made a difference? Maybe, maybe not. We'll never know.


>>many smartphone apps deliver functions that can be performed for free on the Internet. As mobile speeds increase, it's much easier to do things on the web (or with web 2.0 tools) than downloading a specific app. It's the same in the fixed PC world

This is an interesting discussion that I'm starting to get into with some of my friends in Europe. The difference between PCs and mobile devices is that a PC is always in network coverage (unless it's a notebook) and there's very little latency on the network. Using 3G here in the US, I'm frequently out of coverage (including inside my house), and there's a lot of latency on the network.

The coverage is a lot better in Europe and Japan.

So here's my take: Download apps from websites? Yes. But cache them on the device so you can keep using them when you're out of coverage. I think the pure thin client model is not great for a mobile device.


Scott wrote:

>>Here at Xinlab we love the Samsung phone you panned a few days ago. Why? It is a great development platform.

Cool! So now we've found two things that it's great for -- being a 3G modem, and acting as a development platform.

What makes it a great platform compared to other phones, by the way? Are you programming it in Java, or something else?


Dylan wrote

>>Crappy sites to buy the software. You really think I can convince my boss that Handago is a good place to buy our software?

Whoooooee, don't get me started on the mobile software stores. That could be a whole post in and of itself. I know a number of people who work for the stores, and I like and respect them. But I've said the same thing to them that I'll say here: the shopping experience on those sites is awful. It's like going to a flea market -- except most flea markets are better organized, and you can eat kettle korn while you walk around.


>>Getting software on the device is too much work....Put the software catalog on the devices.

Yes!!! More on that next week.

Rafe said...

Great to see a wide range of views. Just to follow up something Dean said - I agree that a lot of the smartness of smartphone is operator / manufacturer development - as much as 80% I would say in some cases. However that doesn't mean the other 20% can not be benefited from - but it is not the low hanging fruit.

I'm not so sure I agree that this isn't something user education can fix. Maybe user education is the wrong word / wrong point. I think you can draw a parallel between mobiles and PCs (although I accept you have to be careful doing this). The PC software market only really took off when people understood the benefits they could get from it and when there was good stuff available. PLus we seen a whole load more innovation around web services - but relatievly speaking web services are still used only by a small number of people (compare Flickr users numbers to the whole computer population).

The mobile (especially smartphone) market is still very young. This together with the associative baggage that comes with it being a phone (i.e. its a phone I can install software on it can I?) means that there is an unrealised potential. It is a combination of a lack of applications and service people want (I think some exist but finding them is hard because of operator gatekeeping) and the fact people just don't get it yet (user education if you like, but broader really)... So that's what I meant by user education being a solution. Maybe it should be termed market education and maturation?

I think the point about online services is also interesting. I think it is entirely possible that demand to be able to use these serrvices may drive people to open OS phones (almost the same thing as a smartphone). However I think that mobile has the same problem as PCs do with online services and more (latency issues already mentioned). Clearly in Japan the majority of application / user functions that are not standard on the phone are provided through the portals, but Japan is a different market. I think in the end we'll see some and some. Something are inherently suited to online and some work better offline. Tube Map - offline, country wide mapping - online for example.

Finally I'd thought I just toss this into the discussion. Mobiles are going to be (already are?) the ubiquitous personal device and people will customise them. Mobile are and will be a lot more personal than PCs. Services and applications have just a role to play here in customisation. In fact I think there maybe more value in consumer services and application on mobile because they are the most personal device. There's no way you can keep everyone happy out of the box so add ons are the answer. Be it for the train spotter or the photo nut. I do think there is a discinnect here at the moment. I remember a recent seminar where the speaker said the mobile software industry is a bit like the shareware scene on the early 80's - used by the minority with a long way still to go!

The bigger issue, as other have touched on, is how these get delivered to users. This is the thing that needs work because it is currently not working.

Rob said...

I think there is another key point here related to what people actually want/need.

Go back a few years in Palm and the bestselling apps (ok, I'm guessing) would have been a decent mp3 player, a decent web browser, a decent email client and a decent document editor/viewer.

These days, you probably get those out of the box, so there is no _major_ thing you need. As such, there is no need big enough to make you learn about adding apps (that they exist, how to do it, etc)

With fewer people talking about the cool thing they added, there is less push for people to discover that they can add stuff, let alone explore for the tings they didn't know they needed.

Olivier said...

Hi all,

Very interesting discussion!
I'm confident end-users are going to purchase a lot of smartphone apps :-)
We just need:
- to create great apps (extremely simple and easy to use)
- to find a good selling process

Palm and PocketPC apps:
- find on the web
- download to your PC
- sync your handheld with your PC
- try
- buy a license key
- pay by credit card or paypal

Java apps:
- See an ad (tv, radio, magazine, free newspaper) and send a Premium SMS
OR
- Browse an operator portal and select an app
- Download directly to your phone
- Play
- You will receive the bill from your operator

We (just) need the right selling process for smartphone apps: great user experience, massive distribution at low cost, seamless payment

Good news:
- people do install new apps when they just need to click "OK" 3 or 4 time
- a lot of them even pay a small amount if it only takes 1 clic
- mobile advertising well done is well accepted by users and can also be a nice source of revenues

Cheers,
Olivier

raddedas said...

Glad you liked the blog so far! We certainly feel that by remaining annonymous we'll be able to deliver relevant comment on companies we would otherwise want to maintain good relationships with, or at least not appear pre-emptively hostile towards... the writing style probably does gives away the fact that we're GB based, and I'll go as far as to say I personally work for a reasonably large developer targetting the J2ME platform with mass market products - Java focussed because of the installed user base rather than any special loyalty to the language (law of averages suggests that someone somewhere must think the MIDP spec is the greatest thing since sliced bread but I've yet to find them...)
We've all worked in the mobile industry since the advent of colour screens, some since the start of wap. Any more and it becomes too incriminating :)

I agree with the various opinions here that a pure thin client is not going to cut it on mobile, even staying still with 'full coverage' in the centre of major European cities I've had trouble holding down a 3G connection. Optimised client apps - intelligent browsers with slick UIs and local caching - seem to me to be the way forward for at least the next 2-3 years.
API inconsistency in J2ME is a pain, but you can achieve some very impressive networked intelligent client apps using MIDP1 in 64k, as long as you know what you're doing.
The more advanced APIs your app needs, the more you cut your potential market size, but for example there are many more handsets with 3D + file system/PIM access + SMS than the entire smartphone market (which is fragmented into more than three different development platforms). Security is a mess but encrypted transactions can be achieved over HTTP with very little code; web services APIs and the like are not ready yet but really, an efficient optimised binary protocol has to beat a general XML protocol when you're paying by the byte. I'd be a millionaire if I had a penny for every time potential clients have suggested (top secret, don't let anyone know our great idea) that it would be really cool to have a tamagotchi style app which feeds off your phone usage (make more calls, send more texts to keep him happy) which no widely deployed JSR will allow you to do, but do customers really want this?

Clearly there are apps which require tighter integration with the phone, but generally when I hear the ideas I cannot think why an end user would want to run them. Working in heavily constrained environments is not conducive to the creation of new killer apps, but too often the constraints bring out the worst in people: give up or abandon 90% of handsets...

Chris Dunphy said...

It has been distressingly sad watching the mobile application space slowly withering over the past few years.

So much could have been done to build a thriving ecosystem - but instead the garden has been untended and left to rot.

Some of the problems are obvious, and should have been easy to fix (hey - we tried!).

It has never been acceptably easy to find / buy /download / and manage software on any mobile device without needing a PC in the loop or needing to be within a carriers walled garden. And a walled garden will never bloom into an open and healthy ecosystem - no matter what fantasies the carriers have to the contrary.

But aside from building a functional ecosystem, the "platform" has failed to evolve to enable and encourage entirely new types of next-generation mobile applications.

I think a "new platform" (potentially layered on top of the old ones that have run out of steam) is indeed likely the only answer to the deadness in this space.

I've got a lot of ideas of what this might look like. I am really curious to see what you are thinking - and if our thoughts on this are still in sync.

- chris

Anonymous said...

I think that the future of mobile application market is not promising.
The clear example is 3G. This market, is relly didn't take off.
Look at the job market, are there any ads about mobile employments? almost NONE... Be carefull before your skill become obsole and unmarketable...
Just do something else, before it's really late.

Michael Mace said...

Wow, we're getting a lot of great comments. I want to add some more ideas to the mix, but won't be able to do it justice until tonight California time. In the meantime, I wanted to respond briefly to the anonymous post:

>>Look at the job market, are there any ads about mobile employments? almost NONE... Be carefull before your skill become obsole and unmarketable...
Just do something else, before it's really late.


I think that eventually the mobile data market will take off (for reasons I'll explain more fully in my next post, hopefully next week). But it's hard to tell what the timing will be, because there are some structural barriers to success. It's like trying to figure out the timing for takeoff of the e-book market (if you want to read more about that subject, it's listed in the favorite posts list at right).

Although I don't think it's time to give up, that anonymous post does reflect the anxiety level I hear from some mobile app developers. Some of them are that depressed, and it's a painful thing to watch.

Mel Sampat said...

Mike, I've posted some analysis of your article, and some of my own perspectives on why mobile application sales are dropping. Take a look:

http://blogs.msdn.com/melsam/archive/2006/06/16/634692.aspx

Michael Mace said...

I love the way this discussion has taken off. In a lot of ways it's better than my original post. Some thoughts...


Rafe wrote:

>>I think in the end we'll see some and some. Something are inherently suited to online and some work better offline. Tube Map - offline, country wide mapping - online for example.

Excellent point. One of the mistakes that many of us make in the mobile market (myself included) is trying to make categorical statements. We'll say "customers want x" or "developers need y." The market's so big and so diverse that those absolute declarations are almost always badly wrong.

So you're right. Instead of saying thin client is good or bad, we should talk about what the user is doing and which architecture solves their problems best.


>>I think there may be more value in consumer services and application on mobile because they are the most personal device. There's no way you can keep everyone happy out of the box so add ons are the answer. Be it for the train spotter or the photo nut....The bigger issue, as other have touched on, is how these get delivered to users. This is the thing that needs work because it is currently not working.

Yes, yes, yes, yes, yes!


Rob wrote:

>>Go back a few years in Palm and the bestselling apps (ok, I'm guessing) would have been a decent mp3 player, a decent web browser, a decent email client and a decent document editor/viewer.

Ahhhhh, this is fun. I actually have that data, from the market research that Palm did in 2003 (okay, that I did at Palm). And we released it at a developer conference, so I can share it with you. Here goes:

About 60% of Palm OS users added apps to their devices, and two-thirds of those people paid for them (the others added only shareware).

We then asked them which applications they had added to their devices (and that they were currently using). Here are the fourteen most popular apps, with their percentage of the installed base of devices:

Documents to Go 9%
AvantGo 8%
Bible software 8%
Enhanced or vertical market calculator 7%
Big Clock 6%
Vindigo 6%
Mapping software 5%
Epocrates 5%
Diddlebug 4%
Financial software 4%
Palm Reader 4%
Pocket Quicken 4%
Travel software 3%
HanDBase 3%

There were an enormous number of apps tied at around 2%.

My takeaway: There is no killer app. Mobile is all about vertical products for vertical needs.


>>These days, you probably get those out of the box, so there is no _major_ thing you need.

Actually, I think there is/was software relevant to almost everyone, but a lot of users never knew about it. But yes, some things are now in the box, and some categories of apps (AvantGo, for example) are pushed aside by the browser.


Olivier wrote:

>>We (just) need the right selling process for smartphone apps: great user experience, massive distribution at low cost, seamless payment

Yup. It sounds simple, but so far only NTT DoCoMo has done the whole thing right.


Raddedas wrote:

>>the writing style probably does gives away the fact that we're GB based,

That and the mention of cheese toasties, chav phones, and the fact that you don't like the Razr. ;-)

Thanks for sharing more info on your background. One of the things I like best about the mobile market is that different people around the globe have different, and yet perfectly correct, views of the market based on what they're seeing locally. It's another example of how incredibly diverse mobile users are (and how wrong the operators are to try to sell to them in large homogenous segments). I just wish I had more visitors here from Japan, Korea, and China. Probably the language barrier at work there.

Anyway, you're writing interesting stuff; drop by anytime.


>>The more advanced APIs your app needs, the more you cut your potential market size,

Completely correct, although Symbian keeps saying that with a single-core version of their OS we're going to see a quantum leap in shipments. I have deep skepticism about the impact of single core (I don't think it saves all that much money), but we'll see.


Chris D. wrote:

>>Some of the problems are obvious, and should have been easy to fix (hey - we tried!). It has never been acceptably easy to find / buy /download / and manage software on any mobile device without needing a PC in the loop or needing to be within a carriers walled garden. And a walled garden will never bloom into an open and healthy ecosystem - no matter what fantasies the carriers have to the contrary.

NTT DoCoMo. iMode. Late 1990s.

But yeah, it hasn't happened in the US and Europe.

For those who don't know, Chris was product marketing lead and head evangelist on the late, lamented Palm Source Installer project, which attempted to solve some of these problems.


>>I am really curious to see what you are thinking - and if our thoughts on this are still in sync.

We'll find out in about a week. Stop by the weblog and beat me up if I've lost touch.

Michael Mace said...

Thanks for visiting, Mel. It's nice to have a member of the Windows Mobile team drop by. The comments you made in your blog were very helpful. Some thoughts....


>>Almost all mobile devices sold today have data connectivity. If someone buys a PDA or smart phone today, web browsing and email capabilities are assumed.

I don't think that's true yet at the low end of the handheld market (which is where most of the volume is), but since that's not exactly a growing market I won't quibble. ;-)


>>The fact that today's devices are constantly connected, and in theory "always up to date", means online content is a good substitute for offline applications.

For certain categories of apps, in certain situations, I agree. For example, I think this helps to explain the decline of AvantGo. But even a lot of the connected solutions still need an app on the device – for example, look at the e-mail clients you and RIM make for smartphones. Neither of them are thin clients.

Anyway, I think this can explain part of the dropoff in app sales, but not all of it.


>>Back in 2001 I used to commute 45 minutes by train each way to work. I kept nearly a dozen apps, games and ebooks on my disconnected PDA to kill idle time. To kill 45 minutes today, all I need in the device is my Exchange Inbox, a web browser and an RSS reader

I think that one's a very good point, and one that I hadn't considered. When you're more connected, you use the browser and other online content to kill time and you have less time for dinking around with your device. That ought to have the biggest impact on sales of mobile games and e-books. I'm hearing about slowdowns in sales of more practical software as well, though, so I don't think we've diagnosed the whole problem.


>>Guess how many 3rd party applications I use today? Two.

Yikes. And you're part of the Windows Mobile team, working with developers. I guess that kind of confirms my point that the market for mobile data apps is shrinking.


>>Software development for mobile devices has become much easier over the last few years. The Windows Mobile platform allows developers to write .NET apps using the same languages and tools used for desktop and Web applications.

.Net is indeed cool, but just to keep things in context, it was already ridiculously easy to develop apps on some other platforms, which resulted in a flood of applications on them years ago. Despite this, a lot of mobile developers prospered for years. Something changed in early 2005.

I don't dispute your point that .Net has sucked the profits out of some Windows Mobile developers, but it doesn't explain a slowdown across all platforms.


>>If two apps "sound" the same, but one costs $24.95 while the other costs $9.95, which one should a customer choose? What if there are freeware options available? Try searching Handango.com for "chess" to see what I mean.

Agreed. This goes back to my comment earlier that the software stores are like flea markets.


>>Quality certification programs such as Mobile2Market can help to a certain extent, and we're working with partners to increase their awareness.

No offense, but Mobile2Market is not nearly enough. I'd liken it to a Band-Aid on a sucking chest wound. You guys should take responsibility for running the software store. Build it into every device, and enable users to rate the apps, a la Amazon. That will quickly allow the best apps to rise to the top on their own.

Check out what DoCoMo did on iMode. I think they're the best example.


>>Some consolidation is needed. If small, independent ISVs pooled their resources together to form larger, stronger companies with a longer term vision, we'll see mobile software sales improve.

I'm going to take issue with this one. The big software companies are not the innovative ones. I think what we need is not more slow-moving corporate behemoths, but a market structure that'll let smart new companies get access to the market and grow into big companies.

In every platform transition in the past, new companies took the lead in creation of new applications (luckily for Microsoft; otherwise we'd still be using WordPerfect word processors and Lotus spreadsheets).

Who's going to be the Adobe or Broderbund of the mobile world, and how will we nurture them? I think that's the challenge.


>>If everyone is writing his or her own Sudoku clone and selling it for $9.95, fragmentation is naturally expected.

It's commonplace for people and analysts to dismiss a lot of mobile developers as creators of low-value clone trashware, but if you spend some time digging into the base of applications you find a much richer picture. The mobile developers I talk with are not writing Sudoku clones. They're doing innovative, high-quality apps and they are struggling to make it financially.


>>Mobile devices are evolving so fast that anyone who purchases software for them runs into application compatibility issues at some point. In just the last 3 years, Windows Mobile devices have gone from a single 240x320 resolution to multiple screen orientations, resolutions and DPIs. Device capabilities are increasing quickly, and it has been a challenge for ISVs to keep with all the new form factors.

It is indeed a challenge, and every mobile OS vendor has had a problem with fragmentation. But I think it is the responsibility of the OS vendor to plan ahead and make the APIs flexible enough to accommodate likely future evolution. The screen size example you cite was completely predictable, and I have a lot of trouble excusing either PalmSource or Microsoft for failing to prepare for it better.

And then there's Symbian, breaking binary compatibility for every app in the latest version of its OS. And I hear Brew's going to be in a similar situation with an upcoming release.

Shame on all the OS vendors for doing this to developers. We'd be a lot better off if we had a software layer that could ride on top of all the OS's and wouldn't change every time a hardware vendor wanted to tweak something.

I'm not trying to beat you up personally, Mel. You're doing your best to fix a bad situation. But the company and your partners should not be putting you in this situation over and over again.


>>Companies like Handango and Motricity have done a good job marketing consumer software, but it still remains a challenge.

I think they have done an excellent job of marketing themselves.


>>On-device and over-the-air catalogs can help, but it's not clear how many smart devices ship with an easy discoverable way to download new applications.

That's why you should build it into the OS.


>>At Microsoft we have an internal portal called http://windowsmobilestuff where all employees can download new and interesting apps, games, ring tones etc.

Outstanding! I wish Palm had done something like that (some apps were available internally, but there was nothing systematic).


>>many people are buying BlackBerry and Treo devices solely for email or enterprise/line-of-business applications. Do the corporate executives and service reps that use these as single-purpose tools have the time or desire to try 3rd party apps? Probably not.

Yep. I have an uneasy feeling that this is a big part of the application sales problem. Some of my friends in the handheld hardware companies tell me that their consumer sales are down while their corporate sales are up. If you get handed a device by your boss, I think you're a lot less likely to experiment with it than if you buy it yourself.


>>I disagree with Michael on a couple of things. Firstly, Windows Mobile device sales aren't slowing.

If I implied that, I apologize. The third party numbers are not detailed enough to track Windows Mobile sales directly because you sell through so many ODMs. What I tried to say was that Windows Mobile + Palm OS + Other sales are flat to down. That's what the third party statistics show, and that's the key statistic to developers, because it makes up the main universe of devices for their apps. The fact that you're taking share from Palm OS doesn't mean much to the developers I talk with, because they are on both platforms. All it does is change their mix in a declining overall market.


>>Over 5 million Windows Mobile devices were sold last year and I'm expecting even better numbers for 2006 thanks to successful launches of the Moto Q and Treo 700.

All the more reason to be disturbed at the lack of growth in app sales.

Here's the statistic that would actually be helpful to developers: give us your quarterly unit shipments for the last two years, broken down by the following:

--PDA
--Smartphone with touchscreen (the hardware formerly known as PPC Phone Edition)
--Smartphone without touchscreen (the former Microsoft Smartphone)

And then for each of those, give us the percent of purchases that are retail vs. enterprise-direct.

I know Microsoft has all these stats because I used to have the same information at PalmSource, and we had a lot less money for market research than you do. If we had those numbers, we could make an honest assessment of how the Windows Mobile market is evolving and where developers should or should not invest.

In the meantime, quoting marketing statistics like your total device shipments just serves to emphasize that you're getting fat while your developers slowly starve.


>>Our OEM partners are working on many more great looking devices that will provide smart alternatives to multimedia phones like the RAZR.

That's nice for you and the operators, but meaningless to developers unless you fix the app sales problem.


>>I also disagree about the lack of "sophisticated apps". As managed development for Windows Mobile takes off, some of the best applications being built are those you never hear about because they are enterprise focused.

I don't doubt it, and that's great for your enterprise sales. But I was talking about sales of mobile apps for end-users. Sorry, I should have made that clearer.

When I used the term "sophisticated," I was trying to differentiate between the more serious and full-featured mobile data apps as compared to little Java applets and Sudoku clones.


>>Maybe developers have simply switched focus from writing consumer apps to writing business apps.

Not the ones I talk to. Most of them like selling to end-users and don't want to be in-house developers for corporations. The ones who are switching are moving to Web 2.0 development because they can get quicker returns on their investment and don't have to deal with mobile operators.


>>If the sales of your mobile software are suffering, innovate with connected apps. Leverage the constant connectivity, location awareness and multimedia capabilities of devices to give customers something beyond email. How about a stock ticker that announces the Dow Jones average every hour while I'm driving? How about a popup message notifying me when a green loveseat in good condition shows up on Craigslist within 5 miles of my home?

Lord, Mel, they're trying all of that and it's not working.

No offense, I 'm not trying to beat up on you personally, and I know you are trying to help. It's great that someone from Microsoft is willing to face up to this crisis. But...

To paraphrase Randy Jackson on American Idol: "Keepin' it real, dude, you were a little pitchy and you didn't work it out." Telling the mobile developers that they're not innovative enough is just not the right answer. It makes it sound like Microsoft is out of touch with the reality of their businesses.

rene said...

wouldn't battery life and also device limitations be the reason? I have a dell axim x51V AND a nokia 3230. I don't even think of installing lots of things in my smartphone because if I waste its battery using other apps during the day I may run out of batteries and the phone is dead.

on the other hand (literally) my axim is more powerful, has plenty of space and, if the battery runs out, no big deal.

Michael Mace said...

Rene wrote:

>>I don't even think of installing lots of things in my smartphone because if I waste its battery using other apps during the day I may run out of batteries and the phone is dead.

Good point. Some devices turn off the data side of the device before the batteries are completely depleted, so you'll have a reserve to do some calls. But even then you're flirting with dead batteries, which sure makes me uncomfortable -- and in the meantime, you've lost use of your data apps.

A lot of people preach the beauty of convergence, but in many ways it means making data a second-class citizen on the device...

Anonymous said...

"The platform that is producing lots of smartphone growth isn't currently a big driver of sales of sophisticated apps."

I assume you are trying to not offend anyone by directly saying that PalmOS lacks many sophisticated apps, so users are even less inclined to add commercial software to their devices.

I'd like to share with you MY perspective on why app sales are nosediving:


5 DIRTY LITTLE SECRETS


PalmOS and Windows Mobile's first dirty little secret is that when you get right down to it, the average user has no need (or desire) to purchase commercial apps. They use only a fraction of the abilites of their devices (often just contacts, datebook , email and a few games) and will never bother to hunt for and experiment with a number of new apps. It's still far too difficult for a non-geek to find out about + install third party apps. I've said for years that every PDA should ship with a couple of CDs filled with hundreds of trial versions of third party applications - arranged by category - in addition to a DVD walking new users through ALL the features of the devices + how to look for and install new applications. Including these CDs/DVDs would cost manufacturers next-to-nothing, especially if featured developers piad a nominal fee (e.g. $1000) for the right to be included.

The second dirty little secret is the fact that featurephones have become so sophisticated that many potential PDA users are finding their needs met with these devices. The remaining customers that buy PalmOS and Windows Mobile devices are likely primarily upgraders - who likely already have all the apps they need carried over from previous devices.

The third dirty little secret is the lack of true advances in PalmOS (especially) as well as Windows Mobile in recent years. The spectacular failure of PalmSource to get PalmOS 6 ("Cobalt") used on any shipping devices really hurt the Palm economy. This meant a loss of sales to potentially hundreds of thousands of users who would have likely upgraded their apps to new versions taking advantage of Cobalt's new features. Similarly Windows Mobile's incremental OS upgrades have presented few resons for longtime users to upgrade their software.

The fourth dirty secret is that Palm is now shipping more and more apps with its devices that compete with apps from third party vendors. Rather hypocritical decision from a company who used to tout how it left supplying advanced apps up to third party vendors and gleefully mocked the way Microft traditionally absorbed applications into the Windows OS collective. I'm not criticizing Palm's decision - in fact I believe they should have decided many years ago to stab the developer community in the back by licensing several best of breed apps for PalmOS and shipping them with every new device. (Backup program, security program, tabbed launcher, photo viewer, file manager, video player, etc.) Palm first changed their tune when they bought out MultiMail, then opened the floodgates with the likes of Desktop To Go, Pocket Tunes, etc. For the adventurous MINORITY of users that bother to actually add on any aplications there are THOUSANDS of FREEWARE applications available to choose from, and some of these are even BETTER than commercial competitors (e.g. TCPMP, a superb video player).

The fifth dirty secret (and possibly the most important) is the proliferation of warez. As you know, far more applications are "cracked"/"patched" every year than are sold. PalmOS has been especially susceptible to theft due to the extremely weak protection schemes employed. More and more developers are now ceasing to release PalmOS applications and the loss of sales due to the MASSIVE warez movement is a significant reason why developers give up trying to make a living. I've been tracking the PalmOS (and to a lesser degree the Windows Mobile) warez community for a decade and it never ceases to amaze me how many people use stolen software. In fact, most of the people I've met/talked to that are Palm's biggest advocates (administrators/moderators of Palm OS websites, power users, etc.) regularly use warez.

-----------------------------------------------


Bottom line is that current trends suggest that it is becoming impossible for the average developer to make enough from mobile device software sales to make it worth the hassle of coding + supporting applications. I expect that in the near future our main options will be running apps that came with our devices and a few freeware apps coded by hobby coders.

Anonymous said...

Back in 2001 I used to commute 45 minutes by train each way to work. I kept nearly a dozen apps, games and ebooks on my disconnected PDA to kill idle time. To kill 45 minutes today, all I need in the device is my Exchange Inbox, a web browser and an RSS reader

Great point.

[Microsoft] should take responsibility for running the software store. Build it into every device, and enable users to rate the apps, a la Amazon. That will quickly allow the best apps to rise to the top on their own.

Great point. And Palm should have done the same. There's no excuse fo not streamlining and simplifying how customers find and pay for 3rd party software. It's a shame all that talk about how Palm cared about the "Palm Economy" now appears to have been just SPIN.

The mobile developers I talk with are not writing Sudoku clones. They're doing innovative, high-quality apps and they are struggling to make it financially.

You may speak to good developers, but unfortunately the sample of developers you interact with is NOT representitive of the average developer. Few of us with experience with PDA/smartphone software would disagree with the following statement: "Most PDA and smartphone software is crap".

And then there's Symbian, breaking binary compatibility for every app in the latest version of its OS. And I hear Brew's going to be in a similar situation with an upcoming release.

And what about maemo 2? This is the sad reality of OS development and actually helps stimulate the developer economy. Palm's long history (now abandoned) of striving for backwards compatibility was great for users but actually cost developers many sales to upgraders.

many people are buying BlackBerry and Treo devices solely for email or enterprise/line-of-business applications. Do the corporate executives and service reps that use these as single-purpose tools have the time or desire to try 3rd party apps? Probably not.

Precisely. Lack of sales to NEW, non-business users means less users that are willing to "experiment" with buying 3rd party apps. Furthermore, the absense of any interesting new traditional PDAs from Windows Mobile licensees and Palm as well as Palm's switch to becoming a smartphone company haven't helped.


Here's the statistic that would actually be helpful to developers: give us your quarterly unit shipments for the last two years, broken down by the following:

--PDA
--Smartphone with touchscreen (the hardware formerly known as PPC Phone Edition)
--Smartphone without touchscreen (the former Microsoft Smartphone)

And then for each of those, give us the percent of purchases that are retail vs. enterprise-direct.

I know Microsoft has all these stats because I used to have the same information at PalmSource, and we had a lot less money for market research than you do. If we had those numbers, we could make an honest assessment of how the Windows Mobile market is evolving and where developers should or should not invest.

In the meantime, quoting marketing statistics like your total device shipments just serves to emphasize that you're getting fat while your developers slowly starve.


Harsh words, Mr. Mace. Would you do the same if you were in his position? Were you EVER forthcoming with competitive details when you were the COO at PalmSource? Didn't think so.



-----------------------------------------------

Tam Hanna said...

Hi,
I gotta say three things:

a) As for the HTC stuff, at least in austria, forget it. A girlfriend of mine bought herself an MDA off her carrier a few months ago..and all she did was use it as a freaking mobile phone. Most people buy those thingies as phones and don't even understand that they can add third party stuff!

b) The reason why I never ever bought an app for my mobile phone again is simple: absolute lack of investition security,. A customer of mine uses BinaryClock for Palm OS on the fifth handheld now-my SpaceWarrior Licence still didn't get away from my old MT50:
http://tamspalm.tamoggemon.com/2006/06/17/investition-security-in-the-3g-content-business/

c) Warez. Hmm..I think that developers need to gang up much more on Warez. Suing providers, alerting Yahoo of trading groups, etc!

I look forward to comments!
Tam Hanna

AJB said...

I work for one of the major smartphone manufacturers and deal with the SW and wireless data apps market as part of my job. I think you missed the two most fundamental reasons why this market appears to be shrinking:

1) The majority of buyers of smartphones these days are new buyers to the category. They did not previously own a SP or PDA and thus do not know the capabilities about loading apps (in fact that's a pretty foreign concept since it's only been recently you could do this on stick phones). Thus, there isn't the awareness.

2) The carriers are the gatekeepers and don't allow nor promote many apps except that meet their restrictive and varying standards. I know that other apps can be loaded on if the user seeks them out but see #1. This is a huge issue and when combined with #1 means that a small developer has little chance to leverage the major distribution channel to reach customers. In PDAs developers could depend on some channel support from the HW manufacturers. The SP world order doesn't allow that anymore.

euroclie said...

hello,

Very interesting post and comments...

A few thoughts (in no particular order) on the subject, as both an end-user and a previous hobby developper (beware, I'm really, really verbose, feel free to edit/discard parts or the whole comment):

In France where I live (and probably in Europe in general, I suspect) there isn't yet any flat-rate 3G data plan, and 3G access is still very expensive. So right now, since most end users are paying data traffic with their own precious money, it's unlikely that purely connected applications (for instance GPS navigation software with downloaded maps) will supercede non-connected ones, at least until you can get cheap, flat rate data plan. Hey, even 2G (GPRS) data plan isn't unlimited/flat rate yet! So there's no way "next generation" apps will make it massively to the end user anytime soon. And real-time updated stock quotes are definitely NOT something that many people would pay for. Maybe if it was free and didn't drain the battery in a couple of hours, people would give it a try for fun, and given enough time be tempted by other similar services, but they'd have to be really cheap, which isn't the case at all right now.

Of course, if you're a business user then things are different, as the cost factor doesn't count (to the end-user, at least), but many IT department will severely restrict what can or can't be installed on your business smartphone. And if your company decided to jump in the all-in-one, smartphone world, what are the chances that you use a second device for your private stuff? I don't think that many people would trade one PDA + two phones (one business and one private) for two smartphones, so in that case even power users would settle for a single business device with company-approved apps & content + their private planning and contacts using a separate category, and close to no third party apps.

Comparing the situation in Europe (medium to good network coverage), in the US (such a vast country that network coverage is medium at best from what I can read) and in Japan (very small and densely populated country where coverage is very good and reliable) is difficult at best and probably irrelevant (not the same lifestyle anyway, so certainly different centers of interest as far as third party apps are concerned).

Constantly changing API/OS is a pain for developpers and end users alike, especially if it completely breaks software compatibility. I've just purchased a Nokia E61 (S60 3rd ed.) and the small number of available apps would be laughable if I didn't actually NEED some specific third party apps.

I've used mostly PalmOS devices (especially Sony Clie ones for some time, I even ran the - now defunct - euroclie website), but the lack of innovations after Sony's disappearance (shortly before, actually) made me consider switching to another OS. Palm's refusal to release a WiFi capable Treo made me leave my Treo 600 smartphone (great user experience, btw, I did purchase an impressive number of Treo-specific apps in addition to the vast collection of the previously acquired PalmOS apps) to test successively various devices:

* A Sharp Zaurus SL-C3000 (Linux/Qtopia) device, for which high quality/commercial third party applications were almost non existent

* Lately, a Qtek 9100 running Windows Mobile 5.0, for which a limited subset of the vast PocketPC apps was available, thanks to its brand new OS. :-(

Honestly, I didn't find application installation user friendly on this (or any) PPC device: you need to be near your own PC with ActiveSync and preferably your USB cable, the PPC application will stay cluttering your PC afterward even if there is no desktop component, most if not all of the third party apps will not uninstall properly or sometimes not at all, re-installation or upgrade is nightmarish at best or (most of the time) impossible... I have read that this installation/uninstallation problems are specific to WM5 and memory cards, but still this made my life very difficult during the few months I kept the 9100 as my only PDA & phone device. Besides, the whole platform was overall not stable (things smoothed down a bit after a ROM reflash, but will many end-users endure the pain & risks to do that? Do they even know that this is possible, or how to do it?) or reliable enough to my taste: even a trivial thing like a daily backup to a memory card requires a soft reset (two, as a matter of fact, one before and one after the backup), and if you want your smartphone to be connected to the network again next time you wake up - assuming you perform an overnight backup - you've got to disable your PIN code and thus leave your phone vulnerable.

So as far as applications installation goes, Palm is great (many apps can be downloaded directly as a .prc file and to install it on your PDA/smartphone, you can mail it to yourself, use a card reader, or connect to any PC after installing lightweight and unobstructive apps like Pinstall instead of the full Palm Desktop) but they drag their feet when it comes to technological hardware innovation. Is it really too much to ask to let Treo users use the WiFi SDIO card if Palm persists in not releasing a WiFi enabled Treo?
This inevitably makes lots of users change to something else as time passes and technology evolves. Too bad, as one year spent with a Treo 600 left me with the impression that some very good portals (like mytreo.net, for instance) existed to provide quality apps directly to your device in a suitable format.

The PocketPC universe features some of the most seducing and inspiring hardware available at the moment (a smartphone with built-in WiFi, bluetooth, GPS, GPRS, UMTS... is certainly an impressive achievement), but dealing with add-on apps is definitely a weak point of this platform, especially over-the-air.

The mobile Linux world is still in its infancy, and certainly very few end-users would be able (and willing) to recompile the kernel or modules simply to install a new version of your favorite video player... Besides, there are really too few quality appplications (as in: not alpha/beta versions, you know, applications that make it at least to version 1.0 before the project dies. I've been there before as a hobbyist developer, I know what I'm talking about!).
Even if you're ready to shell out big bucks to have a solution that "just works out of the box", chances are that you won't find much on that platform. A command-line geek's dream come true, sure, but not something for the end-user! ;-)

Symbian's grass isn't much greener, unfortunately. OK, that incarnation of the OS isn't backward compatible on a binary level, so one has to be patient, the problem is more or less the same as with WM5 when it was released, for instance, before developers start porting massively their programs. But then, why don't I have an easy access to a vast choice of (maybe less optimized but at least readily available) Java and/or Flash Lite applets? Even something as basic as a replacement calculator that would make a better use of the E61 keyboard provet yet an elusive Graal too difficult for me to find, despite the fact that I've been dealing with PDA & smartphones add-on software for a while now... What choice, then, could have the novice end user?

Major PDA software sites have not yet adapted their content to be easily browsed and used on Smartphones. Back when you needed a PC or Mac to install something on your PDA, it wasn't such a big hindrance to software purchase, but now, as others pointed out, if you can't purchase and download applications directly from your favorite smartphone, then most people won't do it at all. The big online shops should really take that into account, or they'll dwindle and disappear in the next years.

But developpers are to blame as well. OK, I know that some actually do write code for a living, but IMHO if you want to live from your applications, you'd better make them worth what you ask for them. Seeing yet another Tetris or Sudoku clone sold 10 or 15 US$ makes me want to scream. I'd be willing to spend 50 bucks or more for a decent replacement for the builtin Symbian datebook (Papyrus developers, are you reading this? ;-) so it's mostly a coherence check between the real, on-the-field added value of your application and the retail price.

I know that some manufacturers don't make it easy to small developers, when you have to purchase an expensive IDE or sign in for a substancial fee to have your product "certified" or "signed". But if those who build the devices or the OS chose this route - which seems to be the case - they'll be responsible of the "death" of the freeware/shareware community, without which any platform remains dull and without interest.

Another grief against developers and software website alike: When I see software sites being flooded by dozens of "updated" applications just because the company released a bugfix to their dictionary application, and then updates every language pack containing that dictionary engine to reflect the new sub-version change, I consider that a poor commercial practice, and it pushes me to avoid those products - if I have the choice.

All in all, I think that PDAs and smartphones are slowly becoming "mainstream". While this is fortunate because it means they'll be cheaper and you won't drag strange looks anymore from your neighbors when sending a mail from your smarphone, this also means that they're leaving the "niche" market of technology enthusiasts who were passionate and devoted to their latest gadgets. Getting some "buzz" about a new application is becoming more and more artificial, and difficult to achieve.

No more passion means that people stepping into the PDA/Smartphone world now are less willing to spend time & money for uncertain results (beta applications, or those without trial versions, and tedious retail interfaces). They want things to be as transparent as possible for them, and neither the developers nor the portals have yet adapted to the new requirements. Many established developers are simply not listening to the customer base anymore, they just update their applications from time to time to add support for newly released devices, and very occasionally add a new feature, but this means a bad end-user experience should any problem arise.

I was delighted, when I purchased the Nokia E61, to see that there was a S60-3rd-Edition-compatible version of SplashID which I had used for years on PalmOS devices and for months on the Qtek 9100. But after purchasing it (a cross-grade, cheaper that the full version, which I really found a nice thing to do for a developer) I noticed that the Symbian version misses the "lookup" function that made this application so easy and pleasant to use on the other platforms. And it seems they have no plan to add this function in the future, too (can you spell "crippled"?). They're established and respected developers, with a very good software offer, and yet they fail to provide what the customers expect (like a way to sync their desktop version with the Symbian version of this application). Is it really that surprising that sales flatten or get down when almost everywhere you see the same scenario happening?

Michael Mace said...

Anonymous wrote:

>>I assume you are trying to not offend anyone by directly saying that PalmOS lacks many sophisticated apps

No, I was talking about Symbian, the platform driving almost all of the world's smartphone growth.


>>PalmOS and Windows Mobile's first dirty little secret is that when you get right down to it, the average user has no need (or desire) to purchase commercial apps. They use only a fraction of the abilites of their devices

But for a long time sales of Palm OS and Windows Mobile apps were growing quite nicely. I'm trying to figure out what changed. Are you arguing that the users for both platforms became less sophisticated over time?

(I'm not trying to argue with you here -- your point's legit. I'm just honestly trying to figure out what changed.)


>>I've said for years that every PDA should ship with a couple of CDs filled with hundreds of trial versions of third party applications

That would be cool -- although I'd be even happier to see the full software store built into every device.

Considering the relatively small size of most mobile apps, I wonder how many you could fit on a CD. I bet it's a lot.


>>the lack of true advances in PalmOS (especially) as well as Windows Mobile in recent years

I'm with you on that one, although I'd point to both the hardware and the software. In the last few years there has been a lot of what I'd call feature innovation -- higher-res screens, more wireless, etc. -- but not a lot of functionality innovation (really new devices that solve new problems). It's kind of telling that the two hottest smart devices of the last couple of years, the Blackberry and the iPod, were not built on either Palm OS or Windows Mobile.


>>The fourth dirty secret is that Palm is now shipping more and more apps with its devices that compete with apps from third party vendors.

Agreed, but the app slowdown extends beyond Palm OS, and I don't think Microsoft and its licensees have dramatically changed their app bundles.


>>As you know, far more applications are "cracked"/"patched" every year than are sold. PalmOS has been especially susceptible to theft due to the extremely weak protection schemes employed.

Wow. Very interesting. Do you think the piracy rate has accelerated dramatically in the last 18 months? And is the situation the same for Windows Mobile as well? If so, that could account for the sales slowdown.

I'm not sure that piracy accounts for the lack of app sales on S60, though.

Are there any online stats you could point me to on the piracy rate for mobile devices? I'd like to look into it further.


>>I expect that in the near future our main options will be running apps that came with our devices and a few freeware apps coded by hobby coders.

I hope not.


Anonymous #2 wrote:

>>"[Microsoft] should take responsibility for running the software store. Build it into every device"... Great point. And Palm should have done the same. There's no excuse for not streamlining and simplifying how customers find and pay for 3rd party software.

I agree completely.


>>It's a shame all that talk about how Palm cared about the "Palm Economy" now appears to have been just SPIN.

If only it were that simple. I'll write more about it in my next post.


>>You may speak to good developers, but unfortunately the sample of developers you interact with is NOT representitive of the average developer.

Fair enough, I'm probably talking to a lot of the most dedicated and professional ones. All the more alarming that many of them are not seeing sales growth.


>>Harsh words, Mr. Mace.

Hmmm. I wasn't trying for harsh. But I was trying to be very, very blunt. If it came across harsh, I apologize.


>>Were you EVER forthcoming with competitive details when you were the COO at PalmSource?

I wasn't asking for competitive details. I was asking for more details on Microsoft's shipments. I think that's a reasonable request. And yes, I gave out information like that very frequently when I was at PalmSource.

PS: I was never COO. But thanks for the promotion. ;-)


Tam wrote:

>>As for the HTC stuff, at least in austria, forget it. A girlfriend of mine bought herself an MDA off her carrier a few months ago..and all she did was use it as a freaking mobile phone. Most people buy those thingies as phones and don't even understand that they can add third party stuff!

Okay, this is starting to be a consistent theme from several people. If the typical customer for Palm OS and Windows Mobile is changing into someone who doesn't care about apps, that could account for a lot of what we're seeing.

Interesting.


>>The reason why I never ever bought an app for my mobile phone again is simple: absolute lack of investition security,.

I read your post. This situation wouldn't explain the slowdown on Palm OS and Windows Mobile, but it's still a very interesting point.

I wonder what will happen if I download a lot of songs from my operator and then change phones? I assume they would have thought about that, but you never know...


>>I think that developers need to gang up much more on Warez.

I think most of the mobile app companies are too small to do it. This would be a good task for the software stores and platform vendors.


AJB wrote:

>>The majority of buyers of smartphones these days are new buyers to the category. They did not previously own a SP or PDA and thus do not know the capabilities about loading apps

Wow, we're getting close to a consensus on this one. Cool!

If this is what's happening, I think it is the responsibility of the platform vendor to make users aware of the apps.


>>The carriers are the gatekeepers and don't allow nor promote many apps except that meet their restrictive and varying standards....In PDAs developers could depend on some channel support from the HW manufacturers. The SP world order doesn't allow that anymore.

I agree. One of the things I want to explore in my next post is ways to get around this problem.

Thanks for the comments. Good stuff.


euroclie wrote:

>>beware, I'm really, really verbose, feel free to edit/discard parts or the whole comment

You scared me with that introduction, but actually your comments were great. Please post anytime.

Besides, posting long stuff is turning into a tradition around here, and I'm more guilty of it than anyone else. I just wish the comments mechanism on Blogger made it easier to manage this number of comments. One more reason why I need to switch software.


>>In France where I live (and probably in Europe in general, I suspect) there isn't yet any flat-rate 3G data plan, and 3G access is still very expensive. So right now, since most end users are paying data traffic with their own precious money, it's unlikely that purely connected applications (for instance GPS navigation software with downloaded maps) will supercede non-connected ones

Ahhhh, very good point. All-you-can-eat data isn't what I'd call cheap in the US, but at least you can get it. It's easy for me to forget that conditions are different around the world.

Does anyone know what the data plans cost in South Korea? Supposedly huge numbers of mobile users there are streaming video, and I'd like to know how they pay for it.


>>Comparing the situation in Europe (medium to good network coverage), in the US (such a vast country that network coverage is medium at best from what I can read) and in Japan (very small and densely populated country where coverage is very good and reliable) is difficult at best and probably irrelevant

It's funny. I worked for years in the PC industry, which everyone thinks is complex (probably because it's so big). Actually, it's quite simple: You have Windows, you have a little bit of Mac, you have a little bit of Linux. They are used for pretty much the same tasks around the world.

Meanwhile, most nontechnical people I talk with assume that the mobile data marketplace is fairly simple (perhaps because it's still in its infancy). In reality, it is one of the most complex and confusing industries I've ever dealt with.


>>Honestly, I didn't find application installation user friendly on this (or any) PPC device...So as far as applications installation goes, Palm is great

I agree with you that Palm OS is sometimes easier to install apps on than Windows Mobile, but I don't think it's easy enough. Many of the apps come bundled in Zip files, which are very confusing to many users. And then there's the whole process of waiting for a registration code and then entering it. Yuck.

This is what the PalmSource Installer was supposed to fix.

By the way, I liked your comments contrasting the various platforms.


>>I know that some manufacturers don't make it easy to small developers, when you have to purchase an expensive IDE or sign in for a substancial fee to have your product "certified" or "signed". But if those who build the devices or the OS chose this route - which seems to be the case - they'll be responsible of the "death" of the freeware/shareware community, without which any platform remains dull and without interest.

I could not agree with you more. In some situations you have to pay every time you do a bug fix to your app – the system actually penalizes you for fixing bugs. How twisted can you get?


>>When I see software sites being flooded by dozens of "updated" applications just because the company released a bugfix to their dictionary application, and then updates every language pack containing that dictionary engine to reflect the new sub-version change, I consider that a poor commercial practice, and it pushes me to avoid those products - if I have the choice.

I think some developers have learned that they get more visibility on the store when they post a new version of their app. If the software store were built into the device, bug fixes could be loaded to your device automatically and then you wouldn't have this problem.


>>All in all, I think that PDAs and smartphones are slowly becoming "mainstream"....this also means that they're leaving the "niche" market of technology enthusiasts who were passionate and devoted to their latest gadgets.

Okay, now we're definitely at a consensus on this point.


>>No more passion means that people stepping into the PDA/Smartphone world now are less willing to spend time & money for uncertain results

It also means we have to market to them. We can't count on them to find apps on their own.

Dean Bubley said...

I want to follow up on one of Rafe's comments, as I think my comments about using the Web instead of applications was taken to mean "do everything online", when in fact I meant something else.

"Something are inherently suited to online and some work better offline. Tube Map - offline, country wide mapping - online for example."

I completely agree. But I've just used the "offline" Tube map as a specific real-world example here.

I went to VisualIT's website (http://visualit.co.uk/) on my PC, I could have downloaded their Tube mapping engine, paid for the London underground map ($18) with a credit card, and then gone through the usual install/sync headaches. Trying to do this direct on my device (an HTC/T-Mobile MDA) needed a bunch of clicks & the pages took ages to render. It then again wanted me to download the engine first (how many people need multiple tube maps?), rather than a quick link to "London Tube map? Click here". There was no indication of how large the (zipped) engine file was & therefore how much it might cost to download. I gave up.

Instead, I went to Transport for London's website (www.tfl.gov.uk), clicked on "maps" and downloaded the Tube map as a PDF. Total time from URL to browsing with the PDF viewer = less 3 minutes (& that's even with GPRS speed & latency). Total cost = zero (I get a bunch of free data per month) and even if I had to pay per MB, the file is only 168kb.

This is one facet of what I meant by competition for applications by free stuff from the web. You don't have to be online all the time.

Rafe said...

Sorry I misread/misunderstood your original point Dean (should have realised really).

The only thing I would sy about this is that usually free results in a bad user experience. To take your example - once you get the VisualIT stuff installed it works very well (quicker to browser maps, station look up, route planning). [Once agin we come back to the install distribution problem for applications]. Compare this to the PDF (which you have to know or guess exists), have a PDF reader installed (not standard on consumer phones), have to know how to download and then find again (try explaining file systems on a mobile phone) etc etc.

Actually this is an unfair example since it's more difficult that a lot of free web services. I agree that free stuff in the Internet is competition.

The Tube is also an interesting example of the problem we're discussing. The irony is you can text text TUBEMAP to 60835 and get sent a free Java version of the Tube Map with some additional finding / planning features...

However I don't believe the user experience is good enough for the mass market (though this could change). Moreover I think this user experience is much harder to fix than the software distribution problem.

The PC mindset is to get free stuff via the Internet and while this works for many things, it is facing the same user experience / distribution issues as mobile. Web 2.0 products are used by a minority of Internet users. Even the broad appeal, mass market ones are used by only a faction of Internet users.

Free is sometimes over rated. If people want it they will pay for it. Everything has to be paid for somehow by someone.

(And yes this is getting away from Dean's original (excellent and quite correct) point - I'll stop waffling).

Anonymous said...
This comment has been removed by a blog administrator.
Michael Mace said...

Sorry to remove a comment, folks, but the web is full of places where you can attack each other. Take it over to PalmInfoCenter or someplace like that.

My two basic guidelines for comments here are no profanity and no personal attacks on other commenters. Both have the effect of inhibiting discussions.

I'm especially leery of attacks when the author doesn't identify him or her- self.

Sorry,

Mike

Anonymous said...

Sorry to remove a comment, folks, but the web is full of places where you can attack each other.

Gee, Mike - it wasn't an attack. I was making the point that warez is extremely pervasive and is a major reason that the sales of PalmOS software is not doing well. I find it ironic that many of the people who post about how bad warez is are in fact using warez themselves.

You previously asked for stats to back up the assertion that warez is on the rise. For obvious reasons, such "stats" are going to be difficult to obtain. If you're genuinely serious about this I can give you a few contacts in the warez world that can provide you with figures on how many copies of their warez-related apps have been downloaded over the years. One site even has a sophisticated setup that will even crack an app uploaded from your computer and allow to then immediately download the cracked version.

I think you're trying to complicate a simple issue, Mike. The reasons software sales are failing are all sitting right here on this page.

Michael Mace said...

Anonymous wrote:

>>Gee, Mike - it wasn't an attack. I was making the point that warez is extremely pervasive

Fair enough. It's possible I'm being overprotective of the blog on this issue because I've seen other forums completely ruined when people started sniping at each other. It's not just what it does to their discussion -- it also discourages other people from posting because they're uncomfortable with the personal sniping.

For what it's worth, I think you made your points much better in your follow-up, because you focused on the issue rather than the author.


>>If you're genuinely serious about this I can give you a few contacts in the warez world that can provide you with figures on how many copies of their warez-related apps have been downloaded over the years.

I am definitely serious. I don't have the time to do an in-depth investigation, but I'd love to see what I can learn. And I'll report on it here.

Thanks!

Ch@rlie T@i said...

How about software piracy? I am from Taiwan and I know a lot of S60 users in Taiwan or China are using pirated applications (Java or S60 native).

Since these Java/S60 applications are quite small in file size, they're so easy to be distributed over "PC" internet and then transfered to the phone.

In order to fight piracy, many anti-piracy mechanism like online product activation are used on the PC platform. But I don't see similar stuff on the mobile platform.

I guess a walled garden might be a solution. If every application is downloaded from the portals of carriers (OS native or Java), then there would leave little room for piracy. Yes, the 3G coverage is still a problem. But I believe it would be solved in the near future.

MathiasTCK said...

I was a java games developer for Jamdat now I'm learning Symbian. That's how I stumbled here :)

The distinction between smart phone and other is less useful now. As noted above, many new users previousl had a high end "dumbphone." They just wanted the next step up and bought a smart phone.

Non game/ringtone/IM applications might not be doing as well... but game/ringtone/IM applications are doing great :) The market has changed, everyone has a color phone with data access now. All these new users with powerful phones have different desires and expectations.

I bought myself one of the first VCast phones, the LG8000, and then my company upgraded it to an LG8100. With unlimited data my killer app was mobile.answers.com (so I could use wikipedia to look up what whatever I had just been talking to someone about).

I predict that gradually users will be doing more with their phones, but right now we still need to gradually seduce users into getting the most of their handsets.

Now I'll go back to exploring my new Symbian phone :)

Michael Mace said...

Mathias wrote:

>>right now we still need to gradually seduce users into getting the most of their handsets.

Agreed. And at the risk of over-stressing the metaphor, in order to seduce the users the industry first needs to let them know apps are available, and then entice people into using them.

At this point, far from being seductive about mobile data, the industry is acting like a 15-year-old boy who has a crush on a girl but doesn't know how to ask her out, let alone know what to do if she accepts.

It's gonna' be a loooong adolescence at this rate.

Anonymous said...

The problem with marketing is that if you're surrounded by it for too long you tend to end up believing your own stories.

I think it is wrong to analyze the market in hardware marketers' terms: Is it Palm OS? Windows Mobile? Symbian? PDA or smartphone? Whatever... Sure, software developers care about hardware platforms and operating systems, but consumer don't. It's individual products that shape an immature market like this one. Like the iPod phenomenon.

Maybe you should think in terms of e.g. "Nokia N91 software sales" and not in terms of "Symbian Series 60 software sales". What gadgets, make and model, are people buying apps for? If it feels like a phone I'll use it to make calls, whatever the hardware and OS.

MathiasTCK said...

I don't see anything wrong with treating handset families as related. I can't tell the V600, V505 or any other triplet apart until I pop out the battery or read it's user agent :)

But you do have to make sure you are comparing like with like. The series 60 qwerty phones are more like other qwerty phones (to most consumers) then they are like the non qwerty series 60 phones.

The Razr is more like the Sprint Samsung A900 then it is like any other Motorola phone I'm familiar with.

Statistics are often lies because they are comparing orange sales to apple sizes.

Still, you can't ignore brand :) In the mobile world people often do so at their peril. If you pick a manufactuer you've never heard of, because it has a big screen, and a camera, you may soon find the phone has few applications available, and those applications crash alarmingly.