By Itai Tsiddon
Data helps grasp the scale of the computational platform shift to mobile, arguably one of the more influential things happening to business. By the end of the year, there will be around 2 billion smartphones in use. By the end of the decade, 4 billion are projected to be in use – four for every five adults, with only one consumer PC per five. A wealth of evidence shows that mobile is becoming an integral part of human behavior – maybe it will change its form, but for the time being, it’s pretty busy changing everything else. Mobile is a new part of our lives, ubiquitous and immersive.
Apps are largely the way software is currently packaged for users on mobile. 2014 was a good year for the app market: in the twelve month period leading to Q3 2014, Apple paid out around $10 billion in revenue to third party app developers, and Google paid out $5 billion. Run rate basis is of course higher, and as revenue paid directly out on these platforms, that is just a fraction of the value that was created on top of them. Perhaps even more remarkably, 2014 was the landmark year in which mobile app usage in the US outgrew usage of both the desktop and mobile web combined.
The scale of these new global distribution and marketing channels create real opportunity in new forms. Small, agile teams can achieve results that were previously unthinkable for their size, with little to no funding. Complimentary factors such as lower development costs and abundance of APIs further contribute to these dynamics. Our own company, Lightricks, is a great example. In less than two years, we scaled to 20 employees without a cent of investor’s money. This was done solely on the strength of profits from our first product, Facetune, one of the global best selling apps in the paid category. It’s pretty amazing to see how far product/market fit goes when every business can enjoy effective global distribution from day one. The ecosystem itself is evolving rapidly: over the past year we’ve encountered new ventures doing everything from accounts-receivables financing to private equity styled redundancy and synergy M&A operations, focused solely on the app market. Unsurprisingly, venture capital activity in the market is rife: around %16 of venture capital dollars invested in the US last quarter reportedly went into mobile startups.
The growing world of mobile software isn’t without its challenges, of course. There seems to be a consensus that mobile discovery is yet to reach maturity, with no Google-like service to organize and surface relevant content and products. Accordingly, user acquisition is a challenge many developers face, and prices for mobile app install ads by the leading player, Facebook, have gone up over the past year. Far-sighted people are wondering what apps and even mobile devices will look like in the next few years. Whatever the future may hold, mobile technology will likely be part of it, changing the way companies do business and providing exciting opportunities to build new ones.
I’m indebted to Benedict Evans of A16Z, CB Insights and others for making some great data and insights public.
Editors Note: Itai Tsiddon is a co-founder of an Israeli-based mobile software startup, Lightricks Ltd. Itai is based in New York and leads Lightricks business development. Lightricks, a %100 bootstrapped company, scaled purely on profits up to 20 employees in its first two years. Its first product, Facetune, a powerful portrait editing application, became one of the world’s leading paid apps, selling millions of copies and reaching the #1 top paid app rank in over 100 countries. Lightricks has also served as Facebook’s case study for mobile user acquisition. The companies products have been featured by Apple, Google, Amazon & Microsoft, including as one of Apple’s Best of 2013. As Lightricks continues to grow, it remains focused on creating more state-of-the-art products and technology in the field of mobile image processing, aiming to enable creativity by everyone.
For more information about Lightricks Ltd., click here: www.Lightricks.com
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