The Bottom Line: What is This Business About Apps?

Just when it appeared that every business model had been explored, apps came along. As if the ability to purchase a digital version of a favorite old tune for 99 cents wasn’t amazing enough, very smart people from all walks of life found a way to offer little bits of technology that suddenly no one can live without. Want to know where to find the best gas prices? There’s an app for that. Planning a wedding? There’s an app for that. Want to know more about apps? Yes, there’s an app for that, too. Nothing to do while waiting for a meeting? You get the idea ...

Between July 2008 and July 2010, Apple grew 225,000 different apps; total app downloads topped 4 billion. The Android market came in second place at 70,000 and the Software Store for Palm came in at an even more distant third, with 5,000 apps. By last month, however, those already staggering numbers grew even larger. In August 2011, the iTunes App Store alone had virtual shelves featuring more than 350,000 apps being used by 160 million people who accumulated 10 billion downloads. The median time spent per day using apps was clocked at 84 minutes—32 percent of the time spent on games and 68 percent on other apps such as mail, phone and Skype. Average users have 88 apps on their phones.

These are some amazing facts and figures, but the truly phenomenal aspect of the apps revolution is that it’s been achieved without employing a lot of traditional promotion techniques, such as TV, radio or print ads. The prices certainly are attractive. Nearly 60 percent of the available apps are free or sell for a minimal charge.

And unlike other products on the supply end of the supply-and-demand chain, resources are wide open. With a little imagination, technical know-how and intuition about the marketplace, introducing the right app can be a lucrative business. In most app sales, developers receive at least 70 percent of the purchase price, which may not be much per single download but quickly adds up when the numbers reach the hundreds and thousands.

This innovative business model even has the government sitting up and taking notice. Tapping into a broad user base, the military services have introduced applicable apps created by their own personnel. Wise military leaders know that the new generation of warfighters expects the ability to locate each other on the battlefield to be as easy as using foursquare to find friends.

The question is not what’s so captivating about apps but rather how can the companies that develop everything from information security solutions to rugged cases capture buyer attention in the same way that app developers have? What is the get-the-news-out equivalent of word-of-mouth that companies really should be using to make government buyers aware of their solutions? How can companies capitalize on a business model that’s working so well for apps?

No doubt, many AFCEANs have the answers to those questions. After all, the popularity of some apps—and the fall from grace of others—comes down to networking. Frequent use of networking tools ranging from face-to-face meetings to new media to advertising is still the best way to bring attention to products and services, and there’s still no app that can replace that.

~Maryann Lawlor

Editor