The App Store That's Never Closed

This story appears in the February 2010 issue of Entrepreneur. Subscribe »

It's a point that's hammered home time and again via Apple's ubiquitous marketing campaign: Whatever the situation, no matter how commonplace or unusual, there's an app for that. Since launching its App Store mobile application marketplace in mid-2008, Apple and its global network of software partners have introduced more than 100,000 apps for the computing giant's iPhone and iPod touch devices, translating to developer revenues topping $900 million. Data issued in late 2009 by mobile advertising firms Millennial Media and Mobclix indicate that consumers are now downloading in excess of 100 million free and premium applications from the App Store each month, arming their iPhones with the latest in navigation tools, friend finders, utilities and games.

Although there may be an app for iPhone users wherever they are and whatever they're doing, many of those apps are exclusive to the iPhone platform, even though Apple controls only 17 percent of the worldwide smartphone market, according to research firm Gartner. Despite declining global sales, Finnish titan Nokia still owns close to 40 percent of the smartphone market, followed by Research In Motion (the Canadian manufacturer behind the BlackBerry device portfolio) at 21 percent. Like Apple, Nokia and RIM now oversee their own application storefronts--Ovi Store and BlackBerry App World, respectively--and because each company's devices run on rival operating systems, software downloaded from Apple's store won't work on a Nokia smartphone, or vice versa. Add in competing operating systems such as Google's Android and Microsoft's Windows Mobile (each with its own proprietary application store as well), and the big picture becomes as fragmented as a jigsaw puzzle where none of the pieces quite fit together.

Apple may have popularized the app store concept, but the company did not invent it. The pioneers of the application distribution segment include GetJar , an independent app sales portal founded in 2004 by Lithuanian-born serial entrepreneur Ilja Laurs. With roughly 57,000 applications contributed by about 350,000 registered developers, the GetJar catalog yields about 60 million downloads per month, up from 15 million monthly a year ago and second in volume only to the App Store.

Unlike corporate-branded app marketplaces targeting only one operator network, device or operating system, GetJar offers applications from across competing platforms, including Android, BlackBerry, Symbian and Windows Mobile, spanning 1,700-plus mobile phones in all. No less significant, GetJar also distributes software optimized for so-called "feature phones"--i.e., handsets without the processing power or interface advances of smartphones. Even though smartphone penetration is snowballing, feature phones still represent more than two-thirds of all new handset sales in the U.S. alone.

"The fundamentals behind GetJar's success are that we're agnostic to platform, device or wireless carrier, and open to just about any business model," Laurs says. "Sixty percent of applications on GetJar are discovered by referral, and word-of-mouth only works for cross-device, cross-platform apps--iPhone users don't know what's available on BlackBerry App World, and BlackBerry devices are not supported by the App Store. But we cover all phones. Our catalog will always be more complete than any other app store."

GetJar originally launched as a website enabling software programmers to trial their applications across a variety of handsets. At the time, Laurs was running Midas Baltics, GetJar's precursor, producing hundreds of titles across multiple operating systems. "Device fragmentation is a complete nightmare," Laurs says. "If you don't adjust each application for each individual device, you can't guarantee it will work. The solution for us was to open a public beta-testing service and invite anyone with a mobile phone to download the software for free. We asked only that they report back if it worked."

In 2005 GetJar opened its online testing tools to the general public, doubling the number of available applications every two weeks for the next six months. For developers struggling to gain a foothold on crowded mobile operator application sales portals, GetJar represented a new direct-to-consumer distribution channel, bypassing carriers altogether and affording startups the freedom and flexibility to optimize their software for any handset, regardless of manufacturer or network. (GetJar services such as App Download Page simplify the process for developers and consumers, automatically detecting the device model in question and directing the user to the appropriate version of the app on the GetJar site.)

GetJar insists only that developers make their apps free to download. "That's what made GetJar big--we've never charged for anything," Laurs says. Developers monetize their applications by incorporating advertising or launching demo versions through the site and upselling full-fledged premium iterations across other sales channels. As for GetJar, its own revenue model is predicated on offering partners premium placement and promotional services--developers bid for prime real estate on the store's website, and the firm generates income according to the number of downloads that result.

"The pay-per-download program has been very helpful for us," says Tobias Kemper, vice president of North American operations for messaging solutions provider Nimbuzz. Combining instant messaging, presence and voice over IP tools as well as interfacing with services including Skype, Facebook and Twitter, the Nimbuzz app is one of GetJar's biggest hits, with about 22 million downloads to date. "GetJar gives us tremendous visibility. Being on the front page gets you that many more downloads."

In addition, GetJar reduces its operational costs by eschewing the big-budget promotional efforts that fuel Apple's success, relying instead on viral marketing and search engine optimization to attract consumers.

"Trying to compete with the big boys who have hundreds of millions to invest in TV campaigns is something we can't do," says Patrick Mork, GetJar vice president of marketing. "But on each GetJar product page is a link to directly share applications through Facebook or Twitter. It's something to help consumers share their favorite apps in an easy way. Word-of-mouth is extremely important to us."

GetJar attracts between 12 million and 15 million users per month, and although the site offers roughly half as many applications as Apple's App Store, its reach is far more impressive--Apple spans across more than 75 international markets, but GetJar is available in 200-plus countries. A GetJar consumer survey released last autumn says� that one in three of the store's users downloads new software every day, and 61 percent download content at least three or four times a week. The survey also notes that 81 percent of users are male, with 65 percent falling in the much-desired 18-to-34 demographic.

GetJar users also are agreeable to mobile advertising efforts. In fact, eight out of 10 users report actively downloading applications containing mobile ads; 73 percent look favorably on brands that use mobile apps to promote their products; and 74 percent say they would download an app sponsored or developed by a well-known brand. That's no doubt music to the ears of GetJar developer partners such as Google, which acquired mobile advertising network AdMob for $750 million last November.

But what most differentiates GetJar from the App Store is its openness. GetJar will approve any application as long as it isn't malicious or illegal. Apple is notorious for its draconian and often mysterious app standards process. It even faced a Federal Communications Commission inquiry after rejecting a Google-branded VoIP client. Moreover, applications submitted for GetJar are typically approved for consumer download within one business day, a far cry from the App Store's average 14-day approval cycle. No wonder so many software programmers are publicly renouncing the App Store. Most notably: Facebook staff developer Joe Hewitt, who spearheaded the creation of the social network's wildly popular iPhone app. He said in November that he will quit building applications for Apple devices, blaming the decision on the App Store review process.

Nor does the App Store make room for applications that compete with native iPhone features such as Apple's iTunes digital music store or the Safari web browser, a policy that effectively shuts out developers such as Opera Software, which creates browsers for both the desktop and mobile platforms. Nevertheless, Opera Mini, a browser optimized for feature phones, has surpassed the 25 million download benchmark on GetJar, second all-time behind only the more than 27 million downloads of instant messaging client eBuddy.

"We were an early GetJar partner, and we had no idea how successful it would be," says Opera chief strategy officer Rolf Assev. "The world is about much more than smartphones--80 percent of the market still uses other devices, and that's where GetJar has grabbed the lead. People who come to GetJar are looking for different and interesting applications. It's like a never-ending success being there."

One strong similarity between GetJar and the App Store is the overwhelming popularity of mobile social networking applications. In addition to eBuddy and Nimbuzz, the five most popular GetJar apps include Facebook (more than 14 million total downloads as of late 2009) and social media solution mig33 (in excess of 15 million). Social networking is now the biggest application category on GetJar, accounting for about 30 percent of downloads, followed by games at 15 percent.

"If you measure in terms of engagement, 85 percent of GetJar use is social media applications," Laurs says. "Users download a game and play it an average of seven to 10 times. After that, they replace it. But users access social networking services 10 times every day. That's a huge difference in stickiness."

GetJar's growth and influence have not gone unnoticed by mobile operators, whose own attempts to market and distribute applications historically have fallen well short of the mark. With subscriber interest in applications continuing to increase and diversify, some carriers are now turning to GetJar to help broaden their software libraries--partners so far include British operator 3, Vodafone Ireland and Virgin Mobile France. When struggling U.S. carrier Sprint Nextel opens its own application storefront this quarter, GetJar reportedly will flesh out its arsenal of feature phone apps. Handset maker Sony Ericsson's PlayNow Arena multimedia portal also outsources much of its app workload to GetJar.

"If you're a carrier, you don't want to lock yourself into just one app store," Laurs says. "Carriers want to sell phones or services, so it makes sense to offer multiple app stores to consumers and let them compete."

Competition is also positive for app stores, Laurs says. "Consumers are becoming more educated about mobile applications, and the net effect is that it's increasing demand," he says. "Even with all the other stores in the market, our growth this year was the highest in five years."

The next few years should prove no less transformative. Money transfer applications, location-based services and mobile search will reign as the top mobile app categories by 2012, according to a recent Gartner forecast. Crediting consumer interest in smartphones, the participation of Internet players in the mobile space and the emergence of app stores and cross-industry services, Gartner expects that the LBS user base alone will grow from 96 million worldwide in 2009 to 526 million in 2012, claiming location-enabled solutions will meet a range of consumer needs spanning from productivity tools to social networking and entertainment. In addition, Gartner predicts browsers will be available on about 80 percent of handsets shipping in 2012, compared with 60 percent of devices in 2009.

"The business is changing," Laurs agrees. "More and more brands are figuring out a mobile strategy and using mobile applications as an extension of their service. It's similar to what the Internet was like 15 years ago. If you're developing a mobile application, you must be able to reach the consumer on any device. We can help."

Developing Habits

Tips for Aspiring Mobile App Entrepreneurs

Consumer demand for mobile applications continues to surge. A recent forecast from market research firm Frost & Sullivan projects app store downloads will reach 6.67 billion per year in 2014. More than half a billion iPhone and iPod touch application downloads took place in Q3 2009 alone, Apple's App Store reported. And developers continue to stream into the mobile space hoping to strike it rich--Apple adds there are now more than 125,000 registered developers in its iPhone Developer Program. Nor is the iPhone the only mobile platform generating developer interest: Android application project starts increased 94 percent between last September and October, according to mobile in-application analytics provider Flurry, a leap attributed to Verizon Wireless' launch of Motorola's Android Droid smartphone.

GetJar founder and CEO Ilja Laurs says there's still room for even more aspiring mobile entrepreneurs. "Only a tiny fraction of the subscriber population is heavily into mobile apps right now, but in the next few years, it could grow to the size of the music industry," Laurs says. "If you look at mobile software development, the effort is similar to producing a song. Look at how many musicians the entertainment industry supports--there are a number of highly successful musicians that make millions."

Here's more expert advice on mobile application development:

"The key is coming up with a product that consumers want. That may sound intuitive, but we see hundreds of apps come through every week. And while the overall content and execution are getting better, some developers still don't have an idea of what the market is about or what consumers are looking for," says Patrick Mork, GetJar vice president of marketing. "Developers should talk to consumers, carriers and app stores to see what they want. You would be surprised at how many people don't do this. They also need to consider the situation where the app will be used and how to make it better to fit that occasion."

"It's very important that developers be aware of the complexities within the mobile space--there are so many platforms, so many operating systems and so many form factors," says Opera Software chief strategy officer Rolf Assev. "Everyone is looking at the iPhone, but how do you get your message through when you're one of 100,000 applications? You have to be careful."

Tobias Kemper, Nimbuzz vice president of North American operations, says: "Pick which platform you want to concentrate on and understand your distribution channel or else it gets incredibly tough. You can't ignore the iPhone--it's a successful device, superior distribution system. But if you want to speak to anyone outside the U.S., the iPhone isn't going to save the day. The rest of the world is still 40 percent Symbian," the dominant operating system on Nokia devices.