Mobile Duopolies Widen as Developers Seek Alternatives

Contents
Key takeaways

Chapter 1 - Mobile Duopolies:
The widening gap between the haves and the have nots

Chapter 2 - The Developer Tools Landscape:
The cogs and gears of the app economy

Chapter 3 - Rise of the Mega SDKs:
The developer tools landgrab

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© VisionMobile 2013 | www.DeveloperEconomics.com

About VisionMobile ™ Contents
VisionMobile ™ is an ecosystems analyst firm working with Key takeaways
top-5 telcos and handset makers. We are best known for
Developer Economics, the de-facto knowledge hub of the Chapter 1: Mobile duopolies
app economy. We are also behind Innovation Economics, The widening gap between the haves and the have nots
the strategy workshops helping CxOs to define winning
innovation strategies. Our mantra: distilling market noise Chapter 2: The Developer Tools Landscape
into market sense. The cogs and gears of the app economy

VisionMobile Ltd.
90 Long Acre, Covent Garden, Chapter 3: The rise of the Mega SDKs vendors:
London WC2E 9RZ Consolidation in the developer tools land grab
+44 845 003 8742

www.visionmobile.com/blog
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Key messages
The following are based on VisionMobile’s recent survey of 3,460 developers across 95
countries, with a balanced sample across North America, Europe and Asia, plus
developer interviews and research insights.

Mobile market duopolies

Mobile handset Industry growing at 23% CAGR. Despite the doom and gloom
circling many mobile handset makers, the industry has been on a steady growth
trajectory achieving a 23% CAGR in revenues since 2009. Underlying this growth are
the increasing smartphone sales that now account for over 40% of all handset sales,
fuelled by low cost Android devices that are rapidly eating away feature phone market
share.

A game of duopolies. The 700 million smartphones shipped in 2012 are
underpinned by the Google / Apple duopoly in mobile platforms which jointly
commands 80% in mobile developer mindshare. This is underscored by the Samsung
and Apple handset maker duopoly, which combines a smartphone market share of 46%,
and accounts for 98% of handset industry profits across the top-8 handset OEMs.
Excluding Apple, total handset industry profits are at 2009 levels, implying that Apple
is reaping all of the added value out of the apps-based mobile computing paradigm
which it introduced. In this same period, Samsung captured the remaining value by
quickly transforming from a feature phone incumbent to a smartphone leader, eating
away the profits of the old guard Nokia who was slow to react to the changing basis of
competition - from the best phones, to the best apps.

Samsung’s profit recipe. As the top-selling handset OEM in 2012, Samsung’s stellar
success with Android smartphones is down to three differentiating elements: firstly in-
house ownership of the most expensive hardware components, ensuring both earliest
availability and lowest bill of materials. Secondly, fastest time to market in launching a
new smartphone based on the latest Android software release. Thirdly, a strong Galaxy
brand and marketing campaigns that differentiate Samsung from the crowd of tens of
Android handset makers.

Tablets are still outsold 3 to 1 by PCs, but they are expected to reach parity in the
next 1-2 years. This will be a critical inflection point for the PC duopoly of Microsoft
and Intel, who are seeing their once-dominant position in computing being severely
disrupted by mobility, where Android dominates platforms and ARM licensees
Qualcomm and Mediatek dominate chipsets.

Platform haves and have nots

Developers swarm around iOS/Android but keep looking for viable
alternatives. Having established a dominant position in consumer markets, Android
continues to lead mobile developer mindshare, with 72% of developers now developing
for the platform, a 4 percentage point increase compared to our 2012 survey. iOS shows
a 5 percentage point drop in Mindshare, which we attribute mostly to the influx of
Asian developers showing a clear preference towards Android. Developer mindshare
varies widely by region, with Android leading in Asia and Europe, while North America

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shows platform parity. The considerable share of mobile developers intending to adopt
Windows Phone (47%) and BB10 (15%) indicate that there is still developer interest in a
viable third app ecosystem.

HTML is the main technology co-opetitor to the Android-iOS duopoly.
HTML is the third most popular choice among mobile developers, 50% of whom use
the HTML-based set of technologies as a deployment platform (to create mobile web
apps) or as a development platform (to create hybrid apps or HTML code translated
into native apps). Overall, HTML is much more successful as a technology, not a
platform, with Firefox OS (and WebOS before that) being the main web-centric
attempts at creating a complete alternative to iOS and Android, including native
platform APIs, and a means to distribute and monetise apps. HTML should therefore
be seen not as competition, but rather as a complement to native platforms, and one
that reduces externalities by lowering barriers to entry and exit from these platforms.

Windows Phone: buy it and they will come. Windows Phone remains unchanged
in developer mindshare at 21% of developers despite the very high intention to adopt in
our previous 2012 survey. Developers seem to be waiting for the right market signals –
a critical mass of handsets - before investing in the platform. Despite Windows Phone
challenges, Microsoft has positioned Windows 8 as a tablet-too platform, and thanks to
strong Windows license renewals, the company is able to reposition mobile market
share figures to their advantage.

BlackBerry mobile mindshare remains stable at 16%, with developers being on
standby mode in anticipation of BB10 sales. Moreover, Intentshare, i.e. developer plans
to adopt BlackBerry, has not subsided since our 2012 survey, indicating that the major
outreach effort undertaken by RIM during the build-up to BB10 release is having some
positive impact. Symbian mindshare, on the other hand, is rapidly and predictably
disappearing, as is, Samsung’s Bada, despite outperforming Windows Phone sales in
Q3 2012.

74% of developers use 2+ platforms concurrently, but money is
concentrated in iOS/Android. At the same time, developer platform choices are
now narrowing. On average mobile developers use 2.6 mobile platforms in our latest
survey, compared to 2.7 in 2012 and 3.2 in our 2011 survey. 80% of respondents in our
sample develop for Android, iOS or both, making them the baseline in any platform
mix. Developers that do not develop for one of these two platforms generate, on
average, half the revenue of those developers that do, leaving little doubt as to the
concentration of power within these two major ecosystems.

Most developers are iOS-first. iOS is a clear winner in the shoot-out against
Android, with 42% of Apple/Google developers prioritising iOS, against 31% for
Android. Several other factors come into play when making a decision on the “lead
platform”, such as prior experience or local handset sales patterns, but iOS comes out
as a clear winner across all platform competitive points except cost and learning curve.

iOS, Android and BlackBerry are lead platforms. In our survey of 3,460
developers, iOS emerged as the highest priority platform, with 48% of iOS developers
using it as the lead platform among all others. iOS, Android and BlackBerry constitute
lead platforms, which are most often used as a main platform among their developers.
Windows Phone and HTML are extension platforms, as they are typically used by

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developers to extend their app footprint into customer segments or regions not
adequately covered by their lead platform. At the tail end of developer preference are
Symbian, Qt, Flash and JavaME ,the “gap fillers”, now used to address all remaining
market niches.

HTML5 needs better native platform APIs, and development environment.
HTML5 is becoming a viable alternative to native for developers working on app
categories such as Business & Productivity (used by 42% of HTML developers),
Enterprise (32%) and Media apps (28%). To compete with native, HTML5 needs better
native API access (35% of HTML developers), a better development environment
(34%), better debugging support (22%). More importantly, optimised HTML5 devices
were not seen as important as the native API access or dev environment. This leads us
to conclude that HTML proponents such as Facebook, Mozilla and Google should focus
on cross-platform tools and development environments on at least equal measures as
they focus on full platform efforts like Facebook Platform, Firefox OS and Chrome OS.

Tablets reaching developer mindshare parity with smartphones, but TVs
remain niche. The majority (86%) of 3,460 developers in our survey target
smartphones, while a large share of them also develop on tablets, led by iOS developers
(76%) indicating the attractiveness of the iPad as a development and monetisation
platform. TV development remains niche (6% of Android developers), as the hype cycle
around the “Smart TV” experience is yet at a very early stage.

The revenue haves and have nots

The steep learning curve of app entrepreneurship. Developers have a lot to
improve in planning their app business. 49% of developers in our sample build apps
they want to use themselves, but end up generating the least revenue. The most
revenue-generating app planning strategies are those that extend an app either into
verticals or different geographies. To some extent, these strategies rely on an already
established and successful business: apps that have been tried and proven in at least
one market and are generally less risky options or “low hanging fruit” for developers.

Advertising is now the most popular revenue model for apps, used by 38% of
developers in our global sample. At the same time, it is the monetisation model with the
least revenue per app. In-app purchases and Freemium are on the rise, having grown by
50% compared to our 2012 survey and are now used by more than a quarter of the
developers in our survey. In-app purchase is now the second most popular revenue
model on iOS, with 37% of developers using it, falling slightly behind Pay per download.

Lack of customer understanding in lean app development. We find it
remarkable that only 24% of developers in our sample plan their apps based on
discussions with users, a figure which does not change with development experience or
proficiency. This indicates that the bottleneck of the build-measure-learn cycle of lean
development is the “measuring”, or understanding customers. This highlights the need
for a frictionless two-way feedback channel between developers and users, much like
what GetSatisfaction pioneered for web apps, and which now HelpShift is pioneering
for mobile apps.

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The Developer Tools Landscape
Over 500 tools for today’s app developers, designers and entrepreneurs. In
the last 3 years, developers have moved from being coders, to innovators, designers and
makers - and a prized customer for the 100s of firms making up the SDK economy, part
of the bigger B2D (business to app developer) market. Developer expectations for tools
and services have changed in the recent years due to the flurry of startups, from
Appcelerator to Zong, which emerged. App developers today have over 500 third party
tools (APIs, SDKs, components) to choose from, catering to every stage along the
developer journey. Developer tools, from ad networks to user analytics SDKs are a core
part of the Android and iOS platform economics, and a major platform differentiator.

Ad services mainstream, other tools use is fragmented. 90% of the nearly
3,460 developers we surveyed use at least one third-party tool or service, with an
average of 1.47 tools used concurrently. Among those developer services that we
benchmarked the most popular is ad networks and exchanges (34% of developers),
reflecting the widespread popularity of advertising as a revenue model. Advertising is
the most popular revenue model, while ads can also act as a promotion channel that
facilitates app discovery. User analytics (28%) and cross platform tools (27%) follow in
popularity with a longer tail formed by developers of crash analytics, BaaS, cross
promotion networks and voice services.

Google’s AdMob, is clearly the dominant mobile ad platform, adopted by
65% of developers that use ad services. AdMob has recently expanded to ad
exchange services, a move that aims to counter the threat that ad exchanges pose for
Google. Second runners, each used by 12% of developers in our sample, are Inneractive,
an ad-exchange/mediation service and InMobi, an ad network growing out of India to
become a major player in emerging markets. Apple’s iAd service comes fourth overall
with 11%, and despite being quite popular among iOS developers, AdMob is the leading
ad service on iOS, used by 66% of iOS developers that we surveyed.

PhoneGap and Appcelerator lead developer mindshare across 100+ cross
platform tools. PhoneGap tops CPT rankings, used by 34% of developers, followed by
Appcelerator and Adobe Air with 21% and 19% developer mindshare respectively. With
over 100+ cross platform tools available, the choice for developers can be a challenge.
Amidst differentiating features for CPTs are access to native APIs, performance
optimisation and the ability to reproduce native UI elements on each platform.

The user analytics duopoly: Google (69%) and Flurry (49%) are well ahead
of competition. User analytics services are becoming increasingly important as a tool
to optimise app engagement and reach, and act as a proxy for user feedback. User
analytics services are significantly more important for iOS developers - used by 39% of
iOS developers in our survey vs. 28% for Android, 25% for WP and 15% for BlackBerry.
Usage of analytics serves as an indicator of the level of competition among developers
on different platforms.

Parse leads with 28% mindshare in Backend-as-a-Service tools but
competition for second spot is heating up as BaaS rises in popularity. As mobile apps
become more sophisticated, so the need increases for back-end features like managing
users, introducing social features, or synchronizing cloud data. Mindshare leader Parse
is followed by enterprise-focused CloudMine (11%). Sencha.io and ACS, both

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commanding a 10% share among developers using BaaS, are solutions that are well
integrated with their corresponding development frameworks (Sencha and
Appcelerator) and therefore do not directly compete with services such as Parse or
StackMob. The Backend-as-a-service market is in early stages, crowded with over 30
vendors that strive to differentiate by constant innovation and additions to their feature
sets - we have yet to see any service dominating the sector to the extent observed in
other developer tools sectors, such as ad services or user analytics tools.

TapJoy (53%) is the leader in cross-promotion network mindshare,
according to our survey of 3,460 developers, with Flurry AppCircle (20%) and
Chartboost (18%) following behind. Cross-promotion networks (CPNs) are used by
developers both as a means for promoting their apps by means of free traffic exchange
across apps, ads paid by cost-per-app-install or in some cases incentivised installs.
CPNs are also used as a revenue model, for developer acting as inventory publishers.

Voice APIs have not made the transition from web to mobile. While voice
services cater to diverse use cases, their mobile developer mindshare is limited to single
digits, as voice APIs are still tied to the developer perception of telephony, a long way
from the future voice-enabled apps. Voice-enablement leaders Twilio and Voxeo have
been much popular within web developer circles, with Twilio rising once in late 2011 to
a top-10 API provider ahead of Facebook, as tracked by ProgrammableWeb. Yet these
voice services are yet to make a major impact in mobile apps. Skype (telephony URIs)
and Microsoft (speech recognition and transcription) are often used, followed by Twilio
and Tropo API users who focus on conference calls, inbound/outbound calling and
voice portal services. Telcos like AT&T, Verizon, Telefonica and Deutsche Telekom have
also released voice APIs in 2012 in a move to extend telephony assets into new revenue-
generating voice use cases.

The Developer tools universe expands and consolidates. The Business to
Developer (B2D) market, has seen a continual expansion in the last three years, with a
flurry of B2D startups emerging to address the ever increasing developer needs. For
every 1,000 app startups, there is a developer tools startup. In parallel, there is
consolidation taking place via organic expansion (e.g. Flurry, Papaya expanding
services organically) and via mergers and acquisitions (e.g. Appcelerator acquired
Aptana, Cocoafish, Particle Code and Nodeable, Apigee acquired Usergrid and Instaops,
Burstly acquired TestFlight and Flurry acquired Trestle).

Consolidation to continue to 2015, led by mobile marketing and enterprise.
We expect the trend of consolidation of the tools landscape to continue unabated until
2015, six years after the B2D market for apps was born, while expansion will focus only
on unaddressed developer tools sectors in the post-launch phase of the developer
journey. We expect two main clusters of developer tools to lead the consolidation:
firstly, marketing tools, as the discovery bottleneck will only worsen as we go from 1.5M
to 10M apps, and while the Apple and Google stores continue to dominate app
distribution. Secondly, Enterprise Mobile Services, which are creating revenue demand
for vendors to mobilise their intranets, and to allow employees to bring their own
device (BYOD) to work. Unlike the consumer apps space, enterprises have a substantial
IT budget per employee, and very stringent requirements for data security, identity
management, backend systems integration, and support-level agreements.

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About Developer Economics
Welcome to Developer Economics 2013, the fourth in our de-facto research series of the
developer economy. This report focuses on developer tools, examining six developer
sectors: ad-networks and mediation engines, backend-as-a-service, cross-platform
tools, cross-promotion networks, user analytics, and voice services.

We also take a close look at many of the critical issues for developers today, such as
most popular platforms, opportunities and challenges with HTML5, cross-screen
development, app revenue models, monetisation potential and much more.

The findings of this report are based on an online survey of over 3,400 developers, as
well as 20 qualitative interviews, conducted in October 2012. Our sample was truly
global, with a balanced sample across North America, Europe and Asia, but also
significant minorities of developers from Africa, Oceania and Latin America.

We hope this report gives you insight into the latest trends on mobile development and
an understanding of the rules of the new app economy emerging around apps and
ecosystems. We hope you enjoy reading it - as much as we enjoyed writing it!

AndreasP, Matos, Christina, AndreasC, Mark, Vanessa, Chris, Michael and
Stijn at VisionMobile.

@visionmobile
www.visionmobile.com/blog

Thank you!
We'd like to thank all the people and organizations that helped us make this project
possible. Special thanks go to:

Our sponsors, without whom we wouldn't have been able to complete this project:
AT&T, Mozilla, Nokia, BlackBerry, BrightCove and Telefonica.

Our Marketing and Regional partners that helped us reach an unprecedented 3,460
developers across the globe, breaking new records for the largest, global mobile
developer survey.

The developers and mobile insiders that took the time and interest to share their
experience with us.

Alexey Sazonov, Christopher Kassulke, George Karavias, Raj Singh, Maximiliano
Firtman, Tzach Hadar in our Developer Advisory Board that provided valuable
feedback throughout this research.

And finally, Kinvey and SoundCloud for their input during the preparation of the
research.

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Research methodology
The Developer Economics January 2013 research is based on a large-scale online
developer survey and one-to-one interviews with app developers.

The online survey was designed, produced and carried out by VisionMobile over a
period of five weeks between October and early November 2012. One to one interviews
were conducted from November to December 2012. The online survey received over
3,400 responses, more than double the number of our previous 2012 survey.

Respondents came from 95 countries. The online survey was available in 7
languages (English, French, German, Korean, Portuguese, Russian and Spanish) and
promoted by 25 marketing and regional partners within the app development
industry. As a result, the survey reached a substantial number of respondents across all
continents. The survey respondents were balanced across Europe (39%), Asia
(27%) and North America (24%). We also gathered a developer sample from Africa
(4%) and South America (4%). In terms of countries, respondents came primarily from
the US (18.7%), India (13.9%) and the UK (5.6%) followed by Russia, Germany and
France. We also received responses from Venezuela, Uruguay, Vietnam and Kazakhstan
to name a few of the 95 countries in total, making this report truly reflective of the new,
global, mobile app economy.

Respondents were asked to indicate the main platform they use for development among
14 mobile and desktop platforms. To minimise the sampling bias for platform
distribution, we compared the distribution across a number of different developer
outreach channels and identified statistically significant channels that exhibited the

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lowest variability from the platform medians across our whole sample base. We derived
a representative platform distribution based on these channels and weighted our
results based on this distribution, as depicted in the graph below. In order to exclude
outliers in our sampling, we derived median rather than mean values where
appropriate. Re-calibrating and adjusting our research methodology was deemed
necessary as we strive to capture trends across an ever growing, diverse and widely
distributed developer population.

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CHAPTER ONE

Mobile duopolies
The widening gap between the haves and the have nots
Despite the doom and gloom circling the mobile handset industry, and the slowdown in
handset shipments observed in Q3 2012, the industry has been in fact on a steady
growth trajectory achieving a 23% CAGR in revenues since 2009. Underlying
this growth are the increasing smartphone sales that now account for over 40% of all
handset sales, a massive 12.5 percentage point rise since Q3 2011. The growth in
smartphone sales, is fuelled by low cost Android devices that rapidly eat away feature
phone market share.

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2012 was the year that established Android’s dominance in the smartphone market. In
Q3 2012 Android accounted for 74% of all smartphones sold and 30 % of all handsets
sold.

Propelled by Android, Samsung became the top-selling mobile handset OEM,
starting in Q1 2012, and ending a 14-year reign by Nokia. Samsung’s success
with Android is down to three differentiating elements, as we covered in our Mobile
Insider note on The Apple and Samsung Profit Recipe (www.visionmobile.com/insider)
- ownership of the most expensive hardware components, including screens, memory
and processors, ensuring both earliest availability and lowest bill of materials.
- fast time to market in launching a new Android handset based on the latest
Android software release, beating all other handset makers to early adopter profits.
- strong Galaxy brand and marketing campaigns that differentiate Samsung from
the crowd of tens of Android handset makers.

Samsung has led not just the Android race, but has also challenged the iPhone on a
single handset basis: for the first time, an Android handset, Samsung’s flagship Galaxy
S3, became the top selling smartphone, outselling the iPhone 4S during Q3 2012.

Meanwhile Apple experienced a slump in sales during most of the year, despite having a
very successful Q4 2011. At the same time, Apple is expected to recover in Q4 2012

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following a strong performance by the iPhone 5. Industry analyst consensus forecasts
record iPhone sales, in the region of 43 to 63 million units; a wide range indeed, but
higher than any previous quarterly actuals.

Handset industry profits grew thanks to Apple
The booming handset industry is underpinned by the Google / Apple duopoly in
mobile platforms; a duopoly that, in turn sustains the handset maker duopoly of
Apple and Samsung. With a combined smartphone market share of 46%, Samsung and
Apple account for nearly all handset industry profit – in Q3 2012 Apple and Samsung
took 60% and 38%, respectively of all profits across the top-8 handset OEMs.

Excluding Apple, total handset industry 2012 profits are at 2009 levels,
implying that Apple is reaping all of the added value out of the apps-based mobile
computing paradigm which it introduced. In this same period, Samsung captured the
remaining value by quickly transforming from a feature phone incumbent to a
smartphone leader, eating away the profits of the once dominant Nokia who was slow
to react to the changing basis of competition - from the best phones, to the best apps.

To sustain its profits Apple needs to refresh its unique product experiences which are
challenged by the Galaxy S3, and to continue spearheading new unique product
experiences in TVs, e-readers, watches and beyond.

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The lack of profitability among established handset vendors is not a sign of an
unhealthy industry but of an industry in transformation. As mobile devices become
mobile computers the value will be increasingly shifting towards apps and third party
developers, a similar path to that tracked by the PC industry. In this new paradigm only
those who are offering integrated experiences through a tailored value chain will
remain profitable, as shown by Apple and Samsung, and much like Harvard Professor
Michael Porter has observed in every other industry.

Tablets challenge the PC status quo
Google has raised the bar on the tablet front by releasing a high quality device (Nexus 7)
at a low price-point ($199 for the basic version), putting its weight behind the low-end
disruption of the tablet status quo and the rise of the 7-inch tablet. Apple’s reaction,
releasing a less expensive iPad, is a clear sign that the Android threat in tablets is a
valid one, and a rare concession in Apple’s recent history. While Apple’s iOS remains
the dominant platform in tablets with a powerful ecosystem fuelled by a steady supply
of apps, the iPad will be challenged by the Nexus, much like the iPhone 4S sales were
challenged by the Galaxy S3.

Tablets are still outsold 3 to 1 by PCs, but they are expected to reach parity in the
next 1-2 years. This will be a critical inflection point for the likes of Microsoft and Intel
who are seeing their once-dominant position in computing being disrupted by mobility,
where the Android platform and ARM-licensed Qualcomm and MediaTek chipsets
dominate. While smartphones can barely be seen as competitors to PCs and notebooks,
tablets present a real PC substitute for the majority of consumer use-cases. The danger
for Microsoft and Intel is not just the dwindling size of the PC market relative to mobile
computing, but also the threat of being uprooted from their dominant position in their
own (PC) market.

The economics of apps
Developers and publishers mostly value reach and revenue opportunities, in that order.
This is directly reflected in the choice of platforms they develop on – iOS and Android –
which offer the widest reach, as we will see in the next section. The choices that
developers make, translate into consumer demand via the added value created by apps,
which then translates into developer supply. This cycle of consumer demand and
developer supply is known as the network effects that have transformed the mobile
industry in recent years.

Consumer choices are extensively reported and tracked by handset vendors and
analysts alike. In Developer Economics we examine the less known and understood
“developer” part of the equation. In the Developer Economics 2013 survey, attracting
more than 3,400 respondents, we asked developers about their choice of platforms and
screens, revenue models, third party services they use and many other important
elements of the app economy.

In doing so we aim to understand how developer choices, together with consumers’
choices will affect the future of the mobile industry, an industry that now attracts VC
funding that exceeds the R&D expenditure of each of Google, IBM, Apple or Nokia
according to investment firm Rutberg & Co. With 30% of that funding going to mobile
applications, developers are now at the centre stage of the mobile industry dollars.

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Developers Driving Ecosystems

HTML is the main technology alternative to the Android-iOS duopoly
for mobile developer mindshare

Having established a dominant position in consumer markets, Android continues to
lead mobile developer mindshare, with 72% of developers now developing for the
platform, a 4 percentage point increase compared to our 2012 survey. While Android is
still perceived by developers as a less profitable platform compared to iOS (as we shall
see), its market share offers the potential for unprecedented reach into smartphone
users.

The long term health of the Android ecosystem will depend on Google’s ability to
manage API and screen fragmentation especially as the majority of the Android
installed base is running an API version that was introduced at least two years before
the latest version of the API, as of January 2013. Android developers must also consider
different ways to engage with a demographically diverse and fragmented user base, the
average purchasing power of which is significantly diluted by rock-bottom priced
Android devices attracting low-income consumers.

iOS shows a 5 percentage point drop in Mindshare, which we attribute mostly to the
influx of Asian developers showing a clear preference towards Android.

Developer mindshare varies widely by region: for example mobile mindshare
for iOS in Asia is 48% vs. 76% for Android, while in North America the two platforms
command an equal mindshare of 65%. Platform mindshare varies also between mobile

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and desktop developers, i.e. developers who develop only on mobile, versus those that
also develop apps for desktop platforms.

HTML is the third most popular choice among mobile developers, 50% of whom use
the HTML-based set of technologies as a deployment platform (to create mobile
web apps) or as a development platform (to create hybrid apps or HTML code
translated into native apps). Note that we have not compared our HTML mindshare
results to the earlier 2012 survey, as the latter looked only at mobile web as a
deployment platform.

Overall, HTML is much more successful as a technology, rather than a
platform, with Firefox OS (and before it WebOS) being the only attempt at creating a
complete, web-centric alternative to iOS and Android, including native APIs, and a
means to distribute and monetise apps. With Firefox OS in early commercialisation
stages, HTML should be seen not as competition, but rather as a complement to native
platforms, and one that reduces externalities by lowering barriers to entry and exit from
these platforms.

Windows Phone mindshare remains unchanged despite the very high Intentshare score
in our previous Developer Economics survey. Developers seem to be waiting for the
right market signals – a critical mass of handsets - before adopting the platform. The
release of Windows 8 could help Windows developers make the leap into mobile
development however there are only anecdotal signs to this effect as sales of Windows
Phone 8 devices have been lacklustre. Microsoft’s attempt to harmonise the user and
developer experience across screens is the right strategy for protecting their existing PC
revenue streams and establishing a foothold on the mobile computing market.
Moreover, Microsoft has positioned Windows 8 as a tablet-too platform, and thanks to
strong Windows license renewals, the company is able to reposition mobile market
share figures to their advantage. To provide a fighting chance for their mobile strategy
to succeed, Microsoft must iterate fast both its platform and own hardware (Surface) in
order to reach the right product-market fit.

BlackBerry mobile mindshare remains unchanged at 16%, with BlackBerry
developers being on standby mode in anticipation of BB10 sales. Moreover,
Intentshare, i.e. interest in BlackBerry has not
subsided since our last Developer Economics
survey, indicating that the huge outreach “We try to address 90% of all
effort undertaken by RIM during the build-up Android users. This includes
to BB10 release is having some positive about 60% of users who are 5
impact. Symbian mindshare, on the other versions behind.”
hand, is rapidly but predictably disappearing, Founder
as is, Samsung’s Bada, despite outperforming App development house
Windows Phone sales in Q3 2012.

19

Windows Phone: buy it and they will come

Mobile developer Intenshare shows 47% of developers plan to adopt
Windows Phone but poor consumer adoption is holding them back

Microsoft’s Windows 8 & Phone 8 strategy brings a unified Metro interface to all
devices and enables significant code sharing between apps across PCs, tablets and
smartphones. However these synergies have yet to pay off and Windows Phone is facing
a bootstrapping issue despite Microsoft’s multi-billion-dollar investment in the
platform. Lack of developer interest is not the issue here, as highlighted by the high
levels of Intentshare. Developers seem to be on standby, waiting for the market signals
– the consumer adoption - that justify an investment in the platform. Moreover,
Microsoft’s attempt to fund development of Windows Phone apps created
misalignment of developer incentives. Instead of focusing on consumers, developers
were focused on getting the easy money, which resulted in sub-par apps. As we said
earlier, you can’t buy developer love.

The majority of mobile developers have already adopted iOS and Android, hence the
relatively low Intentshare among those platforms. Beyond iOS and Android, mobile
developers are showing interest in Facebook, with 23% of mobile developers indicating
that they plan to adopt the platform. Facebook offers little in terms of mobile app
development at present but it provides unprecedented reach. With around 1Bn active
users, it is one of the widest reaching digital platforms on the planet.

20

The considerable levels of Intentshare for Windows Phone (47%) and BB10 (15%)
indicate that there is still developer interest in a viable third app ecosystem.

21

Multi-platform developers are better off

74% of developers use two or more platforms concurrently

74% of developers use two or more platforms concurrently. At the same time,
developer platform choices are now narrowing. On average mobile developers use 2.6
mobile platforms in our latest research, compared to 2.7 in 2012 and 3.2 in our 2011
research. The Android-iOS duopoly in smartphone sales is gradually creating a
concentration of developers around these two platforms: 80% of respondents in our
sample develop for Android, iOS or both, making them the baseline in any
platform mix. Developers that do not develop for one of these two platforms
generate, on average, half the revenue of those developers that do, leaving little doubt
as to the concentration of power within these two major ecosystems.

In our Developer Economics 2013 survey of over 3,400 developers we found that 49%
of developers use just one or two mobile platforms concurrently and 75% use up to
three mobile platforms. The number of platforms developers use depends to some
extent on which is their lead platform. In mobile development, loyalty to one platform
is not something that pays off. Our research shows that the revenues are higher when
using more platforms. For example, an iOS developer porting an app on Android is
likely to experience some growth in revenue. At the same time, for developers working
on four or more platforms, higher revenues are probably the result of extending an
already successful app to more platforms. Obviously, this is not something that all
developers can afford to do; it is a strategy more suited to large publishers or
commissioned developer teams that are large enough to support a number of platforms.

22

iOS vs Android shoot-out

iOS is the best platform for generating revenue but Android provides a
better learning curve and lower cost

With iOS and Android forming the baseline for mobile app development, the obvious
question is: which is best for app discovery, learning curve, cost and revenue
potential? The shoot-out between the platforms favours iOS, which was ranked higher
on four out of the seven platform aspects, with a clear advantage on app discovery (50%
iOS vs. 23% Android) and revenue potential (66% iOS vs. 12% Android). The perception
that iOS provides better monetisation opportunities is well established with developers
as evidenced by our survey data. The iOS platform also leads, but with a smaller margin
on development environment and documentation. On the other hand, Android has a
clear advantage on cost (32% Android vs. 14% iOS) and a small lead on learning curve.

For most developers, the platform perceptions boil down to a decision about which
platform to prioritise, or which of the two platforms to develop for first, where iOS
clearly comes on top with 42% against 31% for Android. Several other factors
may come into play when making a decision on the “lead platform”, such as prior
experience or regional platform mix, but it is fair to say that iOS comes out as the
winner in developer perceptions.

23

Most mobile developers are iOS-first

48% of iOS developers prioritise Apple against all other platforms. They
are followed by Android and BlackBerry developers

In our survey of over 3,400 developers, we compared platform preference, by asking
developers which is their main platform among all the platforms they are using. iOS
emerged as the highest priority platform, with 48% of iOS developers using it as the
lead platform among all others. Among Android developers, 44% use it as a lead
platform. BlackBerry developers also tend to prioritise their platform: 38% of those
using BlackBerry, use it a their lead platform. Together iOS, Android and
BlackBerry constitute the lead platforms.

Besides lead platforms, Windows Phone and HTML are seen as a main platform by
about a quarter of all developers that use them. We call these extension platforms,
as they are typically used by developers to extend their app footprint into customer
segments or regions that are not adequately covered by their lead platform.

At the tail end of developer preference are Symbian, Qt, Flash and JavaME , which we
call “gap fillers”. These are mainly older-generation platforms that are now used to
address all remaining mobile market niches, but cannot survive as lead platforms on
their own. Symbian for example, still has a large installed base, almost double that of
BlackBerry, but given the expiry date set on Symbian handset production, few
developers will invest much effort on the platform.

24

HTML5 trades off capability for portability

HTML5 wins in code portability and low cost development but needs a
better dev environment and native API access to compete with native

HTML5 is becoming a viable alternative to native development across a number of app
categories. In Developer Economics January 2013 we found that HTML developers
mainly focus on specific app categories such as Business & Productivity (42% of HTML
developers), Enterprise (32%) and Media apps (28%). On the other hand, Games are
not a common category among HTML developers (12%).

We asked developers that use or are planning to use HTML about the reasons for
platform selection. The majority indicated code
portability as the main incentive for using HTML5.
Low cost development is the second driving force “Multi-platforms development is a
for HTML5 adoption, highlighted by 51% of major challenge. For a solo
developers. developer there is so much they
need to look at. You can use cross-
HTML is still an “extension platform” as we saw platform tools like PhoneGap but
earlier. We asked developers that use, have used or it’s not that simple, there is a lot of
are planning to use HTML what they think HTML5 tweaking to be done. Going native
needs to compete with native platforms. Access to can also be hard, it takes a lot of
native APIs is a top challenge with 35% of time and patience. HTML5 will help
developers indicating this as a critical success things go in the right direction.”
factor. HTML5 will always be a step behind in
Glenn Stein
support for native APIs, given that platform Java developer and
Maker of PhraZapp

25

vendors are always a step ahead of cross platform tools and browser vendors. In
addition, the HTML5 development experience is subpar, with developers indicating
that a better development environment (34%) and better debugging support (22%) are
needed. More importantly, optimised HTML5 devices were not seen as important as
the native API access or dev environment. This leads us to conclude that HTML
proponents such as Facebook, Mozilla and Google should focus on cross-
platform tools and development environments on at least equal levels as
they focus on full platform efforts like Facebook Platform, Firefox OS and
Chrome OS.

26

Tablets go mainstream, TV apps still niche

64% of developers now develop for tablets, while HTML is equally used
across smartphones, tablets and desktop

The majority (86%) of 3,460 developers in our survey develop on
smartphones, while a large share of them also develop on tablets, led by iOS
developers (76%) indicating the attractiveness of the iPad as a development and
monetisation platform. Despite the rise in Android tablet share during 2012, we did not
observe a significant increase in the share of Android developers targeting tablets (64%
vs. 62% in our Q1 2012 survey) although we believe this is likely to change in the near
future.

HTML developers take a more platform-agnostic approach, as they develop across
smartphones, tablets and PCs almost equally, according to our survey, a testament to
the use of HTML as cross-screen app development technology. At the same time,
HTML limitations, such as lack of support for
native APIs, tooling and device optimizations, “The next 6 months will be about the
prevent it from becoming a swiss-army knife for tablet war. As cheaper models enter
cross-platform development. the market, consumption of both the
devices and the apps that run on
TV development remains niche, at the same them will increase tremendously.”
levels reported in Developer Economics 2012, as
George Karavias
the hype cycle around the “Smart TV” experience
Developer and CEO
is yet at a very early stage. This seems in line with Anlock
findings from research firm NPD, who reports that

27

only 15% of Smart TVs are connected to the internet, limiting their appeal to app
developers.

It is also worth noting the trend of using phones or tablets as a remote control for other
smart, connected appliances in home automation, in-car entertainment, health
monitoring, retail, logistics and even industrial monitoring.

28

Advertising is the most popular revenue model

Advertising used by 38% of developers but is the monetisation model
with the least revenue per app

Advertising has increased in popularity over the past year and has now
overtaken pay-per-download as the most popular revenue model, used by
38% of mobile developers in our survey. Advertising is particularly popular on Android
and Windows Phone, used by 45% and 53% of developers respectively. This is
consistent with the view that consumer spending on Android is generally lower than on
iOS, leading developers to select alternative means for monetising their apps. However,
advertising lags behind all other revenue models when it comes to monetisation,
bringing on average of around $1,000 per app-month, considerably lower than other
revenue models. Advertising is particularly popular in Asia (50% of developers in Asia),
in Africa (42%) and South America (41%). These are mainly emerging economies where
direct consumer spending on apps may be lower than more affluent regions.

Pay-per-download (PPD) remains popular, used by 34% of the developer population in
our survey. However, it is still the dominant revenue model on BlackBerry and iOS,
with 53% and 38% of developers of those platforms using it. In terms of revenue, PPD
fares better than advertising, generating about 30% more revenue per app-month,

29

however it comes second to last among all revenue models. PPD is more frequently
used by developers in Europe (33%) and the US (32%).

In-app purchases and Freemium are on the rise, having grown by 50%
compared to our 2012 survey and are now used by more than a quarter of the
developers in our survey. In-app purchase is now the second most popular revenue
model on iOS, with 37% of developers using it, falling slightly behind PPD. After
subscriptions, IAP brings in the highest average app-month revenue at $1,835. IAP and
Freemium are used much more widely in Asia than in any other region (30% and 31%
respectively, of developers in Asia).

Subscription-based models, while not very popular (used by just 12% of developers),
come out on top in terms of revenue per app-month, at an average of $2,649.
As mentioned in our previous Developer Economics report, while the subscription
model is more lucrative than other revenue models, it is not a model that any developer
can use as it requires significant investment in ongoing, engaging content that
consumers will pay for an a regular basis.

30

Revenue haves and have nots

For developers interested in making money, 67% earn less than $500
per app per month and are below the app poverty line.

Around 18% of 3,460 respondents in the Developer Economics 2013 survey indicated
that they are not interested in making money from apps. Nevertheless, out of the vast
majority of developers that are in it for the money, 67% are not making enough to
sustain them or their business, i.e. they are below the “app poverty line” of $500 per
app per month. For the majority of developers, app development is not financially
rewarding.

Overall, less than 1 in 5 Blackberry developers make more than $500 per app-month.
The situation is almost as challenging on Windows Phone where just 19% of developers
generate more than $500 per app-month, with 61% below the poverty line. The findings
of our survey are somewhat better for Android and iOS although these platforms too,
are far from a developer paradise: 55% of iOS and 54% of Android developers are below
the poverty line. Excluding developers that are not interested in profit, 62% of iOS
developers and 67% of Android developers are not making more than $500 per month
per app.

31

HTML seems a surprise here with just 45% of HTML developers under the poverty line,
far lower than any other platform. However, there are fundamental differences between
HTML and native platforms which are responsible for the differences observed here:
developers using HTML for web development have access to a much larger user base
comprising desktop and mobile users, irrespective of platform. Among HTML
developers, subscription-based revenue models are much more popular than on native
platforms pointing to established online content or service businesses that have
expanded on to mobile.

32

The steep learning curve of app entrepreneurship

49% of developers build apps they want to use themselves, but end up
generating the least revenue

Almost half of developers (49%) in our survey decide which apps to develop based on
their own needs. Those same developers end up generating the least amount of revenue
per app per month, indicating that they have a lot to learn in how they plan their app
business. Naturally, planning a business based on own needs may yield a good
customer understanding, but lacks the rigor of market research or of extending proven
app recipes into new countries or verticals.

We find it remarkable that only 24% of
“The developer learning curve is
developers in our sample plan their apps based
far steeper on the business side
on discussions with users, a figure which does
than on the coding side, and its
not change with development experience or
getting steeper.”
proficiency. This indicates that the
bottleneck of the build-measure-learn George Karavias
Developer & CEO
cycle of lean development is the Anlock
“measuring”, or listening in to user
needs. This highlights the need for a frictionless
2-way feedback channel between developers and
users, much like what GetSatisfaction pioneered

33

for web apps, and which now HelpShift is “Competitive analysis is the key
pioneering for mobile apps. when it comes to decide what app
to develop next.
To decide which apps to build, a sizeable share of
developers uses market research and competitive Jai Jaisimha
CEO
intelligence. Market research and competitive Open Mobile Solutions
intelligence are well-established practices in
business development and we expect that the
increasingly business-savvy developer population
will, in the near future, invest more effort in these
elements when designing a product strategy.

Developers that publish more apps per year tend to make decisions based on different
criteria than those publishing only a few apps per year. For developers publishing 16+
apps, the decision mainly lies with clients or management - these are mostly
professional developers that work on commissioned apps or as employees of larger
publishers where the decision on which app to work on is mainly based on a defendable
business case. Developers publishing more apps also tend to rely on market research
more, whether that is purchased research or own research through app store
monitoring and analytics services.

The most successful strategies are those that extend an app into markets,
either into verticals or different geographies. To some extent these strategies
rely on an already established and successful business: these are apps that have been
tried and proven in at least one market and are generally less risky options or “low
hanging fruit” for developers.

34

35

CHAPTER TWO

The Developer Tools Landscape
The cogs and gears of the app economy
App developers have witnessed many, radical changes since the creation of the apps
economy. In 2008, app developers were the engineers and geeks experimenting with
new mobile software platforms. In the next two years to 2010, developers transitioned
from engineers to entrepreneurs, and the mobile industry moved from “developers will
come to us” to “we must go to them”. Developers moved from being coders, to
innovators, entrepreneurs, designers and marketers. Today the developer is not just an
engineer, entrepreneur, designer or marketers - developers are a prized customer
for the 100s of firms making up the SDK economy, part of the bigger B2D
(business to app developer) market.

Developer needs have grown, too, to cover the entire lifecycle of an app, across
planning, development, reach, monetisation and customer support. The focus of
developer attention has moved from coding to marketing and to supporting customers.

We model developer needs based on “jobs to be done”, from the seminal work
of Harvard Professor Clayton Christensen in understanding user incentives as a way to
design products.

Developers are called to answer key questions such as: How do I select a platform? How
do I identify my target market and which devices are my customers using? How do I
monetise my apps? What is the best way to promote my apps? How do I beta test with
real users? How do I go about setting a pricing strategy? How do I get user feedback
and manage reputation in the marketplace?

All these questions correspond to the numerous “jobs to be done” for developers,
mapping to the needs that developers have to address along the app lifecycle. These
same jobs create opportunities for SDK and tools vendors. The jobs to be done and
opportunities for SDK vendors are best illustrated by the Developer
Journey, a concept we first introduced in our Developer Economics 2010 report,
shown on the next page.

The structure of the Developer Journey
“Tool and libraries significantly
hasn’t changed much in the last three
changed the way apps are
years; what has changed is the flurry of
developed today. Primarily saving
startups that emerged to cater to those
time on coding and influencing
needs, making the developer journey
the way one decides about features
concept a compass for opportunities in the
(based on availability of libraries)
SDK economy. This SDK economy,
and new capabilities.”
popularised by the likes of Appcelerator
and Zong, has emerged to support the Shai Levy
Freelance Android developer
diverse and growing range of developer Israel
needs.

36

App developers today have over 500 third party tools (APIs, SDKs, components) to
choose from, catering to every stage along the developer journey. These tools lower
barriers to entry, reducing development costs,
smoothing the learning curve, multiplying go to
“Searching for developer tools on
market channels and streamlining marketing.
Google isn’t effective – it’s not the
Developer tools, from ad networks to user results, I just don’t know how to
analytics SDKs are a core part of the Android and describe the tools I am looking
iOS platform economics. Such tools augment the for.”
networks effects present in platform ecosystems by Raj Singh
accelerating app creation and reducing developer Founder & CEO
Tempo AI, Inc
costs and risks. At the same time, lack of such tools
on competing platforms like Windows Phone or
HTML is a serious handicap making competition
with the incumbent duopoly even harder. While
leading platforms like Apple often divide and “Having presence in 12 countries
conquer among SDK vendors with changes to API meant that localisation has been a
or app store policies, follower platforms like real challenge during app
Windows Phone often subsidize and bundle development. Adapting content
developer tools within their marketing campaigns. and ensuring that everything is
Developer tools have become a major right for the particular audience
platform differentiator and a developer required significant effort.”
attractor.
Alexander Löffler
Senior Product Manager (mobile)
Developers today have at their disposal an Yelster digital
abundance of tools including app store analytics,

37

user analytics, cross-platform tools, crash analytics, marketing and monetisation tools,
all of them with zero entry-level pricing. We have been researching the SDK economy
for the past few years, and have been tracking a growing number of (currently) over 20
developer tools categories. For detailed tool listings see our developer portal on
build.DeveloperEconomics.com.

Table: Developer Tools and Services

Name Description Example of vendors

A/B testing tools Allow developers to measure user reactions Pathmapp, Swrve, Amazon A/B Testing
and performance when introducing new app
features.
Ad exchanges Technology platforms for buying and selling Inneractive, MobClix, Burstly
online ad impressions
Ad networks Ad networks connect advertisers to in-app AdMob, InMobi, Leadbolt
inventory.
App discovery services Tools to facilitate discovery of mobile apps AppCarousel, Appsfire, Chomp (now Apple)
through search or recommendations.
App factories Code-free, visual design tools for easily Mobile Roadie, Appflight, Red foundry,
building mobile applications, aimed at non- iBuildApp
coders
App store analytics Tools to analyse app downloads and sales Distimo, App Annie, AppFigures
App testing & certification Mobile application testing and certification Apkudo, TRUSTe, uTest
services.
Back-end as a Service Cloud services providing data storage, user Parse, CloudMine, Sencha.io
management and messaging services
Beta-testing tools Platforms facilitating app testing by end TestFlight, The Beta Family, Mob4Hire
users

Crash analytics tools Tools for app crash analytics, bug tracking, BugSence, TestFlight, Crittercism
beta distribution, performance analysis.
Cross platform tools Tools to create applications for multiple PhoneGap, Appcelerator, Adobe Air
platforms from almost the same codebase or
design tool.
Cross-promotion services Ad networks, or promotion channels that Tapjoy, Flurry, Chartboost
allow the promotion of apps within other
apps
Customer support Streamlined customer feedback and support HelpShift

In-app purchase tools Allow developers to monetise by in-app Boku, PapayaMobile, Fortumo
selling of additional content, features or
virtual goods
Performance management Tools monitoring and managing the app Soasta, New Relic (web), Compuware
performance and availability
Project management Tools & services used to manage app Microsoft Project, Basecamp, Pivotal Tracker,
development projects, both for agile and Assembla, Redmine
traditional structured methodologies
Push notifications Enables pushed message to be sent to an warp.ly, Urban Airship
app as part of notifications or marketing
campaigns
Source code management Configuration management and code Git, Mercurial, SVN, GitHub, BitBucket, Kiln
collaboration tools, either self-hosted or
cloud-based
Translation / localisation Translation services and localisation tools Transifex, Applingua, Localeyes
tools for apps
UI prototyping tools Tools to prototype the user interface of an Balsamiq, InVision app
application
User Analytics Tools that track app usage in order to Google, Flurry, Apsalar, Tapstream
optimize user engagement.

Source: VisionMobile

38

In Developer Economics 2013 we surveyed six “Marketing has been a steep
developer tools sectors: advertising, back-end as a learning curve for us. When we
service, cross-platform tools, cross-promotion started we knew nothing about
networks, user analytics and voice services. We ‘ll be it.”
taking a closer look at these sectors next.
Duncan Steele
Co-Founder
We picked the key players in each sector and ranked Valetta Ventures
them by their popularity among developers. We also
asked developers about the reasons they selected
each service and identified the top decision criteria
for each tool and sector. Finally, we found out how
popular each tool sector is and how its usage varies across the major mobile platforms.
In the next section we present our key findings for most of these sectors. We will be
dissecting these results even further on our developer portal at
build.DeveloperEconomics.com providing more detailed information on
individual tools, and what developers think about each one of them.

39

Advertising is the most popular developer service

34% of developers integrate an advertising service within their app but
only 14% use a back-end service

As part of the Developer Economics 2013 research, we found that 90% of the 3,460
developers we surveyed use at least one 3rd-party tool or service, with an average of
1.47 tools used concurrently. Among the top mobile platforms (Android, iOS, HTML,
BlackBerry and WP), iOS developers tend to use third party tools and services more
frequently, followed closely by Android, indicating the higher maturity of tools in the
two main ecosystems. Usage of third party tools and services is highest among
developers working on media apps (including news, sports, weather, magazines) and
games developers, using on average 1.80 and 1.75 tools respectively.

Use of third party tools and services rises with the number of apps developed and
therefore the scale of the organisation which developers work for. Developers who have
worked just on one app during the past 12 months use, on average, 1.27 of the developer
tools in our survey, rising to 2 tools for developers working on 10 or more apps.
However, usage does not increase with the number of apps for all the developer tools
surveyed. For example, cross platform tool (CPT) usage is stable for developers working
on 2+ apps. On the other hand, usage of advertising services rises with the number of
apps a developer is working on.

40

Developers below the poverty line (less than $500 per app per month) use on average
1.55 tools; this creates a negative feedback cycle where revenue expectations can’t
justify an investment in tools to improve the app development or marketing process.
More affluent developers are using 1.94 tools on average, which indicates that they are
more sophisticated in their marketing and development process.

Among those developer services that we benchmarked the most popular is ad networks
and exchanges, reflecting the widespread popularity of advertising as a revenue model.
Advertising is the most popular revenue model but developers also use it as a
promotion channel that facilitates app discovery.

The next most popular tool category is user analytics, i.e. tools that track usage of and
user behaviour within an app. Visibility into user behaviour is essential for developers
that want to decide which modules and features are used most by end-users and
optimise their app accordingly. User analytics services also help developers understand
their user-base and improve user targeting. Cross-platform tools are almost as popular
as user-analytics overall, used by 27% of developers.

Crash analytics services help developers identify bugs in live apps by generating crash
reports and sending them to the developer. Despite the profound benefits that such
services can have on the quality and user experience, our survey shows that just 17% of
developers use crash analytics or bug tracking services.

A sector that has been on the rise lately is the Backend-as-a-Service, providing services
such as user management, remote data storage and push notifications to developers.
14% of developers in our survey employ BaaS services. Coming next in popularity are
cross-promotion networks, only used by 7% of our sample.

It is important to note that some of the developer tools we benchmarked compete
directly with services available by native platforms. For example, iOS provides crash
reporting and sales analytics, while Google provides user analytics. However native
platform services usually lack in terms of features or flexibility compared to dedicated
3rd party developer tools.

41

Cross Platform Tools

PhoneGap and Appcelerator lead developer mindshare across tens of
CPTs

Cross-platform tools (CPTs) address real challenges for developers. Cross-platform
tools allow developers to create applications for multiple platforms - usually mobile,
but increasingly tablets or TV screens - from almost the same codebase or from within
the same design tool. CPTs reduce the cost of platform fragmentation and allow
developers to target new platforms at a small incremental cost. More importantly,
cross-platform tools allow software companies targeting multiple platforms to reuse
developer skills, share codebases, synchronise releases and reduce support costs.

CPTs can be used to develop native, hybrid and web apps and come in several
technology flavours: JavaScript frameworks, App factories, Web-to-native wrappers,
Runtimes and Source code translators. There are over 100 CPTs that we identified in
our Cross Platform Tools report published in February 2012.

Developers most often use several cross-platform tools; on average CPT developers will
use 1.91 CPTs, confirming the lack of maturity and niche nature of cross platform tools

42

much like we observed in our dedicated CPT survey just over a year ago. Moreover, we
found that one in four developers will use more than three cross platform tools. The
lack of a one-size-fits-all and immaturity in the CPT landscape is what is stalling cross
platform tools from shifting the balance of power in the iOS / Android duopoly towards
alternative platforms.

Cross platform tools are most popular for developers focusing on HTML development,
with 38% of of them using CPTs for development. CPTs and particularly JavaScript
frameworks and web-to-native wrappers (e.g. PhoneGap), provide a relatively smooth
transition to mobile apps for web developers: in our Cross-Platform Developer Tools
2012 report we found that 60% of developers using CPTs have over 5 years experience
in web development. Usage of CPTs is popular among iOS developers, while usage
among Windows Phone developers is much lower, presumably due to historical lack of
support for the iOS platform from CPT vendors and Microsoft’s financial incentives for
the creation of native apps.

PhoneGap tops CPT rankings, used by 34% of developers, followed by Appcelerator and
Adobe Air with 21% and 19% developer mindshare respectively. With over 100+ cross
platform tools available, the choice of which is “the right tool” for developers can be a
daunting challenge. Choosing between CPT technologies is not straightforward (i.e.
whether to go for a web-to-native wrapper or a JavaScript framework). Moreover,
developers need to try out a cross-platform tool to see if it aligns with their needs in
terms of performance, learning curve, access to native APIs or look & feel. It’s never a
black or white decision.

The most important selection criterion for CPTs is their availability across platforms.
Due to their deep platform integration, CPT tools support iOS/Android platforms first,
and others secondly. Beyond cross-platform availability, 38% of developers using CPTs
select their tools based on development speed and 33% based on the learning curve.
Since CPTs aim to expedite and facilitate development across platforms, they should
provide a clear advantage over native platforms when it comes to speed and ease of
development to justify their use. Amidst differentiating features for CPTs are access to
native APIs, performance optimisation and the ability to reproduce native UI elements
on each platform.

43

Ad networks and mediation engines

AdMob dominates ad networks (65%) and Inneractive leads among ad
exchanges (12%)

With advertising being the most widely used revenue model among developers,
advertising services attract considerable developer interest taking the top spot among
the developer tools that we benchmarked. Providers of ad services monetise their
service by taking a direct cut of advertising revenue generated by developers through
revenue models like cost-per-click, cost-per-impression or cost-per-action. With 100+
ad networks and exchanges, there is intense competition, regional specialisation and
vertical-oriented solutions. In spite of this diversity, several ad services are not
profitable.

The ad services we benchmarked are either “Selecting an ad network is a
advertising networks that provide direct access to lottery. It’s easier if you have a
their own pool of ads, or ad exchanges (also known regional-centric app, but it’s a
as mediation engines, but excluding real-time challenge if you have a global app,
bidding exchanges) that act as aggregators, as there’s no best-performer
automating access to a large number of individual globally.”
ad networks. Ad exchanges offer some flexibility to John Cooper
Founder
Pyxis

44

developers by allowing them to select between “We're reviewing and changing
multiple ad networks through a single SDK - the ad-networks we work with on
offering better fill rates and eCPMs. At the same a monthly basis to get the best
time, ad network SDKs often provide access to deals available.”
more features available, than the generic
features available through an ad exchange. CTO
Games industry

Our survey of 3,460 developers indicates that,
among developers using ad services, 27% use an
exchange and on average use 1.59 ad services
providers. There is a large variance in the number of developers using ad services
depending on the scale of development: those developing less than 5 apps per year tend
to use ad-services much less than those developing more than 5 apps per year. Among
developers that develop more than 16 apps per year, most likely working for large
publishing houses, software services companies or agencies, about 60% use ad services
in their apps.

Ad services are most popular with those who develop primarily on Windows Phone and
Android (46% of WP developers and 43% of Android developers), and less so on iOS
and BlackBerry (35% and 31% respectively). This is in agreement with our findings on
revenue models being used on each platform, with developers on Android and
Windows Phone relying heavily on advertising to monetise their apps.

AdMob, a service acquired by Google in 2010 is clearly the dominant
platform in mobile ad services, adopted by 65% of developers that use ad
services. AdMob has recently expanded to ad exchange services, a move that aims to
counter the threat that ad exchanges pose for Google. Second runners, each used by
12% of developers, are Inneractive, an ad-exchange/mediation service and InMobi, an
ad network growing out of India to become a major player in emerging markets:
InMobi’s mindshare is 17% in Asia and 33% in Africa according to our survey. Apple’s
iAd service comes fourth overall with 11%, and despite being quite popular among iOS
developers, AdMob is the leading ad service on iOS, used by 66% of iOS developers that
we surveyed.

Ad exchanges are complementary to ad networks. For example, developers will use one
service with high eCPM but low fill rate and another with lower eCPM but nearly 100%
fill to plug the gaps in the better paying service. When selecting an ad network or
exchange, availability across platforms comes on top in both cases. Ease of integration
is also very important, particularly so for developers using ad networks. Supported ad
formats, revenue potential and fill rate are secondary selection criteria, and therefore
constitute differentiation factors across advertising services.

45

User Analytics

The user analytics duopoly: Google (69%) and Flurry (49%) are well
ahead of competition

User analytics services are becoming increasingly important as competition for app
users continues to rise. The ability to track how users interact with apps is extremely
valuable for app developers, designers and product managers alike, and to some extent
acts as a proxy for user feedback. The absence of a direct two-way communication
channel between developers and users means that user analytics often provide the only
feedback channel from user to developer. Our survey of 3,460 developers shows that
28% of developers use user analytics services overall, and the usage rises with the
number of apps developed, reaching 39% among developers working on more than 10
apps per year.

User analytics services are significantly more important for iOS developers that
developers of other platforms - used by 39% of iOS developers in our survey vs. 28% for
Android, 25% for WP and 15% for BlackBerry. Usage of analytics serves as an
indicator of the level of competition among developers on different
platforms. The greater the competition, the higher the need for insights on user

46

behaviour provided by user analytics services. The red ocean competition in the iOS
App Store pushes developers towards increased sophistication in tracking and
improving user engagement and retention efforts, and therefore greater use of user
analytics tools. In comparison, among the top platforms, user analytics tools are the
least popular with BlackBerry developers (15%), indicating lower levels of competition
among developers on this platform.

The picture in user analytics services is quite telling with two services dominating:
Google and Flurry. Google has traditionally been strong in web analytics but it has now
extended its stronghold on to mobile platforms commanding a 69% mindshare among
developers employing user analytics services. Its dominance is mainly observed among
HTML developers. Runner-up Flurry, is used by 49% of developers employing user
analytics services, particularly on iOS (64% vs. 58% for Google). Flurry, being one of
the pioneers in user analytics is the de-facto analytics platform for developers reaching
over 700 million devices each month. Beyond these two services, there are numerous
smaller players vying for third place, currently held by Testflight Live, a service recently
acquired by ad mediation service Burstly. Note that user analytics are a distinct tools
sector to app store analytics (e.g. AppAnnie, Distimo), which provide analysis of app
sales and downloads.

User Analytics services are mostly used in media and entertainment apps (36% of
developers). Google analytics is stronger overall across all these categories, with the
exception of Games where both Google and Flurry are equally strong.

Developers opt for analytics services that are easy to integrate within their apps or that
are available across several platforms as indicated by 51% and 49% of developers using
user analytics services, respectively.
Optimising analytics comes as third
priority, with 31% of developers using “Mobile analytics help you understand
user analytics services being concerned how users interact with the apps and what
with the depth of analytics, and 13% customers really want. They are
being interested in real-time reports. ultimately useful to UX specialists to help
Cost is also a deciding factor as pointed them find out where to aim, how to give
out by 28% of developers employing user real value to the user, which features to
analytics. offer, and how to improve the overall
experience.”
Dimitris Makris
Co-Founder and Head of Mobile
Trebbble

47

Backend-as-a-Service

Parse leads with 28% but competition for second spot is heating up as
BaaS rises in popularity

As mobile apps become more sophisticated, so the need increases for back-end features
like managing users, introducing social features, or synchronizing data with the cloud.
App design and development is usually the focus of the initial app efforts, with back-
end features lacking sophistication or scalability, until the very time when they are
mostly needed. Off-the-shelf mobile Back-end-as-a-service (BaaS) services can save
considerable time for developers that need backend support for their apps. At the very
basic level, mobile BaaS services offer a managed, cloud-hosted database that scales as
the user base grows. BaaS services provide additional functionality on top of this base
layer that usually includes user management, push-notifications, social features and
large-file cloud storage.

Our survey of 3,460 developers indicates that backend services are currently used by
14% of developers, and more frequently by developers working on 16+ apps per year
(25%). Backend services are used slightly more on iOS (18% of iOS developers) than on

48

Android or WP (15%), while BlackBerry “Startups usually fail in the back-end
developers use these services much less (9%), because they are more likely to go viral
as a result of limited support among these very quickly and might not be able to scale
tools for BlackBerry. their back-end fast enough. People don’t
perceive a failure of a back-end as a back-
The undisputed mindshare leader in mobile
end failure. They say that the game is too
BaaS is Parse, used by 28% of all BaaS users,
slow or doesn’t work pretty well.”
followed by enterprise-focused CloudMine
(11%). Sencha.io and ACS, both commanding a Toli Lerios
Engineer (backend development)
10% share among developers using BaaS, are Facebook
solutions that are well integrated with their
corresponding development frameworks
(Sencha and Appcelerator) and therefore do
not directly compete with services such as Parse or StackMob. The Backend-as-a-
service market is in early stages, crowded with over 30 vendors that strive to
differentiate by constant innovation and additions to their feature sets but we have yet
to see any service dominating the sector to the extent observed in other developer tools
sectors, such as ad services or user analytics tools.

Although core features are common among most BaaS providers, there are differences
between them that make the selection easier. For example, the ability to export data is
not offered by all services. Developers often find BaaS restrictive for their app
requirements, which has led to BaaS providers such as Parse, StackMob and Kinvey to
enable developers to implement custom business logic. At present however, our data
shows that developers frequently opt for a custom-built backend solution rather than a
BaaS for greater flexibility.

The main BaaS selection criterion for developers is, as in most third-party developer
services, availability across platforms. However, the richness of the feature set is almost
equally important, as is the flexibility of the service, e.g. the ability to implement
custom business logic. Ease of integration and use, stability and performance are
important to 25% of developers using backend services. Another important aspect of
backend services is pricing flexibility, i.e. the way costs scale with usage. Developers
whose apps experience a sudden surge in user base may find it challenging to scale their
costs as usage grows.

We also asked developers using backend services to highlight the most important BaaS
feature. 28% of developers using backend services indicated data management and 18%
indicated user management and authentication. Next most important features are push
notifications and content management, followed by e analytics (9%), file storage (7%),
cloud code (custom logic) (6%) and social graphs (3%).

The backend service sector is relatively young and expected to grow as developers
familiarise themselves with such services and realise their potential. At the same time,
there is much room for improvement as BaaS providers better understand and adapt
their services to developer needs such as flexible and customisable business logic. The
need for flexibility and relative feature parity points to the opportunity for an open
source back-end service that can be monetized like Github.

49

Cross Promotion Networks

TapJoy (53%) is the leader in cross-promotion promotion, with Flurry
(20%) and Chartboost (18%) following behind

Cross-promotion networks (CPNs) are used by developers both as a means for
promoting their apps and monetising apps. When used for promotion purposes, there
are numerous revenue models, some offering free traffic exchange between apps,
enabling developers to run low cost or free promotions. However, several CPNs operate
on a cost-per-install basis, with developers paying for each user acquired. A special case
of cross-promotion is incentivised installs, where the user gets rewarded for installing
an app, a practice that Apple has been trying to restrict on the App Store.

Used by 7% of developers overall, usage of cross-promotion services is not very high
and does not vary significantly by platform. Usage is higher among developers that
develop games (13% of all games developers) and higher than average among
developers working on comms & social networking apps (9%), entertainment apps
(10%) and music & video apps (10%). Overall, developers using CPNs will use 1.7 CPNs
on average.

50

Cross promotion network usage increases with the number of apps developed, rising to
15% among developers who work on more than 16 apps per year. For developers
working on several apps it makes sense to cross-promote within and across their app
portfolio, a strategy widely practiced by Facebook games market leader Zynga.

Based on our survey of 3,460 developers, TapJoy is leading in the cross-promotion
space, used by 53% of developers that use CPNs. Flurry AppCircle and Chartboost,
follow at some distance and are competing for second spot (20% and 18%), while there
are numerous other providers with over 5% mindshare.

In the competition among cross-promotion networks, the three most important
selection criteria are the number of users reached, cross-platform availability and ease
of integration. For developers who use CPNs for promotion purposes, cost is also
important. We found that, on average, the typical CPI (cost-per-install) was $0.60
among iOS and Android developers in our survey, with no notable difference between
these platforms. When used as a revenue source, the revenue potential becomes
important, as indicated by 25% of developers using CPNs.

51

Voice Services

Skype (39%) is leading, with Twilio (31%) following

Voice APIs allow developers to integrate voice-call functionality within their apps,
bypassing the telco services that traditionally provided these capabilities. Developers
use voice services to enable a number of use cases such as voice calls, conference calls,
video calls, voice transcription and voice portal services. Telcos are reacting to this
trend for enabling use cases beyond classic telephony by opening up access to their
services via APIs. The latest AT&T Call management API, powered by Voxeo Labs’
Tropo Platform, allows users to link their mobile number to over-the-top voice services
provided via AT&Ts API, avoiding the need for a new phone number. AT&T has also
partnered with Twilio as part of their “Advanced Communications Suite” allowing
businesses to manage a host of comms services, including SMS shortcodes and
teleconferencing via the Twilio API.

While voice services cater to a number of different use cases, their use is relatively low
among developers due to lack of awareness. We believe that voice services are still tied
to the developer perception of telephony, and have a long way to go to the future voice-
enabled apps where voice will become a third medium for in-app user interaction

52

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