Saturday, June 11, 2011

The App Breakthrough: APPS vs Browsers & How You Will See The Internet 2

As mobile devices proliferate, will their Apps replace the browser as the main way users access information?  Many think so, others disagree.

Programs like Google's Chrome OS paint a different vision of the user experience of the future.  Google Chrome is totally based on the browser.  All is done through it.  But this OS has just barely been announced and no real products using it have been released.  Meanwhile, iPhone and Android Apps grow at exponential rates.  Apple has been accused of running a "walled garden" in iOS, being very controlling and not permitting just anyone from posting apps in the app store.  He says this is to control malware, as well as to keep the user experience to the highest quality.  As one developer in a forum explained about Apple refusing to allow third party javascripts,

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It's not about simply avoiding bugs. It's avoiding shovelware, the massed of J2ME developers who would instantly try to shovel their ugly wares onto the iPhone, and this would lead to negative press for Apple. I can imagine the reviews "Apple's big screen and touch is wasted money.
The Emergence Of A New Internet
Last August, Chris Anderson and Michael Wolff wrote an article in Wired Magazine entitled, The Web is Dead.  Long Live The Internet.  In it, they described the change is occurring in how the Internet is accessed.  As they stated, with the proliferation of mobile devices there is a change occurring in the digital lifestyle of people.  Less and less are they near a computer in the strict sense of the word.  The browser, a piece of software designed with the PC in mind and with its size screen may have seen its golden age of use.  But the browser experience on a mobile device is a totally different experience.  For the average user, it takes too long.  They are not interested in searching for information but locating specific information quickly on a small screen in their hand.  This is a clear case where the form is affecting the function.  In this mobile environment, apps rule. As Wired put it,
"Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display."
Wired Magazine
...the iPhone model of mobile computing,’s a world Google can’t crawl, one where HTML doesn’t rule. And it’s the world that consumers are increasingly choosing, not because they’re rejecting the idea of the Web but because these dedicated platforms often just work better or fit better into their lives (the screen comes to them, they don’t have to go to the screen).
Right now, this is a world dominated by Apple.  Although Google with its Android system has accomplished amazing growth, in the world of the app it is still a follower.  The profitable app market belongs to Apple as of now.  In an article by Ron Miller, in Internet Revolution, entitled, How Web Apps Are Changing The Internet, he states that a recent report by Zokem, posted that apps account for nearly 50% of Internet traffic.  This statement is modified by the fact that Opera the mini browser and generic browsers found on smartphones were counted as "apps."

The next chart from the Zokem report, shows how mobile devices are being used, specifically, how much time is being spent in the different apps and the browser.

Tech Giants Affected By The Little App
The implications for this trend are staggering.  As an example is advertising.  If more and more people are spending their time on small screens, then there is where advertisers will flock.  The real estate on those small screens will be the locus of the battle for control of what advertising users will see.  To further illustrate the hugh amounts of money involved we will cite some new facts.  As of March 1, 2011 Google had ad revenues of $12.4 billion this year so far.  Its ad revenues are growing with Google getting 43.5% of the total online advertising profits and predictions by 2012 of reaching 47.6% of the market share.  The question is, will these profits still continue with the normal browser based ads that Google still depends on?  This mobile space also supplies location more specific information on a users interest than browser based advertising.

Predictions on mobile advertising are impressive.  By 2015, the U.S. market alone is expected to grow to $5 billion compared to the $800 million it was in 2010.  Whoever dominates this market dominates the future of advertising.  Invisible Ink Digital stated,
...the growth of mobile content has been the rise of the App itself and one of the key reasons Google came up with Android. In effect the App has become the preferred vehicle for delivering advertisements to the consumer. This must of caught Google by surprise who may have been banking on it’s traditional online advertising model to apply directly to mobile consumers.
Google, anticipating this trend has come out with its AdMob program for mobile advertising.  In this, it competes directly with Apple's iAd program.  If one persons' experience is anything, Apple is getting very badly left behind by Google in this area.  This user represented the fill rate (the number of ad requests that are filled with ads) as 15% for Apple and 88% for Google.  This is a massive difference in Google's favor.  Another article in Mobility Feeds, dated December 2010, reported that iAd advertisers have been dropping out, most notably the famous brand Chanel due to "...the difficulty of working with Apple."  Google's growing Android platform has also increased advertising.  According to an IDC report Google has 59% of the mobile ads market share with Apple having only 8.4%.  It is true that both companies have different goals in selling advertising on their mobile devices.  As the mobility feed article put it, "For Apple, mobile advertising is a means to an end--helping to selling more stuff [by more stuff we mean more devices but especially the development of more apps, with the advertising funding the development]. For Google, developing a big new revenue stream via mobile ads is an end in itself."  To be clear, developers can use both advertising programs in their apps, at least on the iOS devices.  In fact, one can program the Apple's iAd program to kick over automatically from iAd to Google's AdMob should they not get an advertiser with Apple's program.

It is not known yet what kind of impact Microsoft, Facebook and even Groupon will have.  Dan Frommer has suggested that Groupon is in a position to become their own ad network like Googles' and Apples'.  If you are not acquainted with how Groupon works, we include a video to explain it.  If you cannot see the embedded video, here is the link:

With the advent of iCloud, Apple hopes no doubt to create a context where it makes the best sense for a buyer to purchase iOS devices, thus spurring the production of iOS apps.  Time will tell the wisdom of this vision.

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