GigaOM Research presentation on European app ecosystem. EC-funded project to understand the opportunities and challenges facing European apps developers. Mobile apps. Social apps. Smart TV.

1. Eurapp Study Early Results
David Card, VP Research
14 June, 2013
Shape the Future of the European App Economy

2. Agenda
• European app ecosystem
• App developer characteristics
• Platform requirements
• New platform adoption patterns
• Bottlenecks for the European app economy
• Measuring success

3. European App Ecosystem
OS suppliers
API suppliers
Devices
Social
Mobile
Smart TV
ISVs
New Platforms
Environment
App Developer Types
Originator
IT Developers
Cottage
Industry, Hobbyi
sts
Aftermarket
App Stores, 3rd party app-discovery
Revenue/Monetization
• Consumer spending
• Business spending
• Advertising
• In-app spending (virtual
goods)
Jobs created

4. App Developer Characteristics
450,000-500,000 jobs created in US since 2007
2012 GigaOM Survey with App Developers Alliance (cottage industry)
• 2/3 1-3 person firm
• 60% developing paid mobile apps, 25% developing ad-supported apps
• 40% part-time
• 60% under 4 years experience
• US
– Some post-grad work or degree – 29%
– Average salary $56,000
• W. Europe
– Some post-grad work or degree – 41%
– Average salary $35,000
• Asia--Pacific
– Some post-grad work or degree – 42%
– Average salary $42,000

5. Platform Basics
• Platforms: APIs and services
• Must be win-win-win: originator, aftermarket, user
• Network effects:
– Increase with participation
– Lock-in
– Winner-take all markets
• Key tactics:
– Supply lower-cost technology
– Create habitual usage
– Drive customer acquisition
– Enable service syndication

6. Representative Social Platforms
Spotify Facebook Google+ Twitter LinkedIn
Audience ✓ ✓✓✓ ✓ ✓✓ ✓✓✓
Core tech ✓✓ ✓ ✓
Data ✓✓ ✓ ✓✓✓ ✓✓
Revenue streams ✓ ✓✓ ✓
Tools & support ✓ ✓✓ ✓ ✓
Discovery &
distribution
✓✓ ✓✓
Syndication ✓✓✓ ✓✓✓ ✓✓ ✓
Key: checks represent relative strength of platform offering from developers’ perspective

7. Source: Smith's Point Analytics/GigaOM Research, 2013
Smartphone Crossover on the Horizon
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017
(millions)
Smartphone Shipments, 2012-2017
North America Western Europe Japan

8. Source: GigaOM Pro U.S. consumer survey, 3/12 N = 1,165
3%
3%
13%
14%
18%
19%
21%
22%
34%
40%
46%
6%
6%
26%
29%
38%
39%
43%
44%
69%
61%
69%
0% 20% 40% 60% 80%
Cashed in a digital coupon
Made a payment
Posted photos to the web
Posted to a social network
Downloaded an app
Browsed the web
Viewed a social network
Played a game
E-mail
Took photos
SMS
Regular Activities on US Phones
Smartphone Owners
All Phones
% of online adults with mobile phones
Question asks: Which of the following activities did you do
monthly or more frequently on a mobile phone? (Select all
that apply)
Smartphones Changed US Mobile Usage

9. Source: Internet World Stats, 2012
Facebook Adoption Passing 50% in Europe
0
50
100
150
200
250
Mar-11 Jun-11 Seo 2011 Dec-11 Mar-12
(millions)
Facebook Subscriber Growth
Europe Asia North America

10. Source: GigaOM Pro U.S. consumer survey, 3/12 N = 712
4%
6%
7%
9%
12%
13%
14%
14%
17%
24%
46%
79%
0% 20% 40% 60% 80% 100%
Look for dates
Seek or offer job opportunities
Shop
Listen to music
Share news stories
Local event information
Professional communications
Find out about entertainment
Read news stories
Play games
View or post photos
Communicate with friends
Regular Activities on US Social Networks
% of online adults using social networks
Question asks: For what purposes do you use social
networking sites regularly? (Select all that apply)
Communications, Photos Still Dominated Social

11. Source: GigaOM Research, NextMarket Insights, 2013
Smart TV Platforms Just Getting Underway
0
10
20
30
40
50
2011 2012 2013 2014 2015
(millions)
Smart TV Shipments, 2011-2015
Europe North America

12. Bottlenecks for the Eurapp Economy
• Environmental
– Platform concentration: US
companies dominate
– 3+ year lag in adoption
– Fragmented markets
– Conservative
investors, entrepreneurs
• Technical
– Cross-platform development
– Dev tools, open source
– Native language support tools
– Lagging 4G
– Data portability
• Business and Financial
– Immature ad market
– No standard ad measurement
“currency”
– Unwillingness to pay for apps
– Low-priced apps
– Customer acquisition costs
– Access to capital
• Resources
– Fewer developers
– Lower salaries
– Lack of business expertise at
tech startups

13. Early Feedback on Bottlenecks
• Interviews with platforms, aftermarket, developers
• Consensus: app developers need more support on business
development (marketing, monetization) than tech
Key Business and Financial Bottlenecks:
• Revenue opportunities: direct fees seem more immediately
desirable than advertising
• Marketing assistance: promotion/discovery, search advertising and
other marketing
• Expansion into additional national markets
• Expertise and/or platforms to support local
currencies, taxes, different carrier or platform policies, etc.

14. Measuring Success
• Independent Software Vendors
– Revenue
– Downloads; monthly users
– Franchise expansion
– In-app purchasing patterns
– Brand lift
• IT Developers
– Adoption
by employees, customers, partne
rs
– Market-specific objectives
(e.g., reduced
customer service costs, increase
d transactions, etc.)
• Cottage Industry, Hobbyist
Developers
– Similar to ISVs on reduced scale
– Ability to attract funding
– Growth as exit path to IPO or
acquisition
• Sustainability
– Critical mass
– Path to maturity
– Extended product portfolio
– True hobbyists: provide for
own personal income, not lasting
business

15. Takeaways and Next Steps
• Platform growth will take care of itself
• Are the platforms providing the necessary ingredients for the
ecosystem?
• Who can assist with the business and financial bottlenecks? How?
• Two surveys
– Independent app developers
– IT app developers
• Feedback for the aftermarket model and jobs profiling
• Input into the crowdsourcing exercises
On to the workshopping!