Targeting consumers through smartphone apps is proving to be a good business bet. Jenny Williams reports on the costs of creating apps for different mobile marketplaces
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From retailers to banks, most business-to-consumer companies (B2C) are developing mobile apps to allow customers to access services and information as well as shop online. But what are the challenges for companies developing mobile apps?
The benefits are clear. EBay more than tripled mobile trade in 2010, generating nearly $2bn in sales compared to $600m in 2009. Debenhams has launched Android and Nokia apps after its iPhone app achieved 360,000 downloads and sales of nearly £1m within five months of launch.
Harriet Williams, head of digital development at Debenhams, says mobile apps build on its multi-channel strategy. "Launching on the Android and Nokia platforms opens Debenhams mobile shopping to millions more customers, bridging the gap between the high street and Debenhams.com," she said.
But creating apps for multiple mobile devices will be increasingly difficult as businesses look to minimise app development costs and tackle discrepancies between app store requirements, while still providing a rich user experience.
App store costs
Developing apps for single mobile platforms to use mobile device specifications, also known as native apps, can be costly.
Apple's iTunes app store, Google's Android Market, Nokia's Ovi Store and Research in Motion's Blackberry App World are among the leading mobile application stores. Apple currently only accepts native apps for its app store.
Current annual fees for app stores are relatively inexpensive. Microsoft and Apple charge an annual developer fee of $99, Google charges $25.
However, in addition to annual fees, app store owners take a cut of sales. For most app store owners it is 30%. This could change in the next couple of years as antitrust regulators in Europe and the US consider the revenue share between app store owners and suppliers.
Price of app development
More than app store charges, the cost of app development can be substantial.
Terence Eden, independent mobile consultant, says hiring developers and graphic designers, buying equipment and software licences for each platform, such as Microsoft Visual Studio, as well as clearance for images and software testing all adds to the cost.
"Companies should be wary of spending less than £15,000 to £25,000 a platform to develop a native app," says Eden.
In addition, producing an app for a single platform may not be sufficient to reach target customers.
Eden believes most businesses have to design and build apps on three or four different mobile platforms, each with its own rules and requirements, to reach all the target customers.
Launching as well as updating apps simultaneously across platforms is also near impossible due to the different app acceptance rules, which Eden says is a PR challenge for organisations.
Organisations are turning to third-party companies, such as Grapple Mobile, to write an app in HTML once and roll a version out for all platforms.
New web standards for cross-platform apps
Ovum analyst Adam Leach says new web standards could help companies to develop across mobile platforms by opting for mobile web apps instead of native apps.
"HTML 5, Java and WAC [Wholesale Applications Community], are all ways of getting apps across to a lot of feature phones."
"HTML 5 increases the level of interactivity in websites so they behave more like [mobile] apps," says Leach.
"The danger is that the specification of HTML 5 is not going to be rectified until 2014, which gives vendors lots of time to do their own implementations and support different extensions," he says.
Web-based apps have slower response times and can compromise user experience by not using device functionality. Stephanie Baghdassarian, research director at Gartner says native apps offers a "more personal and richer experience to the 'vanilla' experience" of a web-based app.
Dale Vile at Freeform Dynamics says a lot of enterprises will look to use deployment frameworks, such as the customer experience management tools provided by Adobe. This allows a native app to be defined once in a framework and rendered for different devices.
"If the organisation relies on image-centric apps, it might want to go for a framework approach for the presentation. If it's an online bank, it's probably better to go down the [web] standards route."
Web applications and frameworks might offer businesses the opportunity to cut costs and bridge multiple mobile platforms, but at present Apple only accepts native apps on its devices.
Organisations will need to consider whether to compromise user experience and brand consistency when opting for app development methods under new web standards and framework deployment tools.
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