Rebooting the EU App Economy / Fraunhofer HHI, Berlin, Germany / 13th November 2013 David Card, Vice President, Gigaom Research "Preliminary Findings from the ICT Developers Survey" David Card is Vice President for Research at Gigaom Research. His expertise is as an industry analyst (and manager) covering the intersection of media, technology, and consumer behavior. His specialities include customer segmentation, competitive analysis, go-to-market strategies, market forecasting. Previously, David has held lead roles in Jupiter Research, International Data Corporation and Electronic Business magazine.

1. Preliminary findings: ICT Developers Survey
David Card, VP Gigaom Research
13 November 2013

2. Agenda
• What we’re trying to accomplish
– Modeling the Eurapp economy aftermarket
– Understanding successes and challenges
– Two surveys as inputs
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Preliminary findings from ICT developers survey
Rebooting the EU economy with apps?
App development challenges
Next steps

3. European app ecosystem
Aftermarket
New Platforms
New Platforms
App Developer Types
Originator
Environment
Social
OS suppliers
API suppliers
Devices
ISVs
Mobile
IT Developers
Smart TV
Cottage
Industry,
Hobbyists
Revenue/Monetization
• Consumer spending
• Business spending
• Advertising
• In-app spending (virtual
goods)
Jobs created
App Stores, 3rd party app-discovery

4. Smartphone crossover coming fast
Smartphone Shipments, 2012-2017
250
(millions)
200
150
100
50
0
2012
2013
North America
2014
2015
Western Europe
2016
2017
Japan
Source: Smith's Point Analytics/Gigaom Research, 2013

5. Facebook adoption passing 50% in Europe
Facebook Subscriber Growth
250
(millions)
200
150
100
50
0
Mar-11
Jun-11
Europe
Seo 2011
Asia
Dec-11
Mar-12
North America
Source: Internet World Stats, 2012

6. ICT developer survey background
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Over 500 responses
Mix across home countries: UK, Germany, France, Italy, Spain
Mix of company sizes: 31% > 500 employees, 20% > 1,000
Mix of industries, though approximately 20% in technology; 13-14%
of biggest companies in financial services

7. Apps for customers more than employees, supply chain
We develop or support custom mobile and social
apps…
For customers
67%
For own employees
56%
For partners, distributors
38%
Main business is commercial apps
18%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 525

8. Half of in-house developers also outsource
Mobile and social apps approach
Develop in-house
63%
Outsource to third parties
53%
Integrate with commercial apps from
consumer apps stores
39%
Integrate with commercial apps from
business apps stores
19%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 525

9. Apps to complement products, aid marketing/sales
Commercial objectives for mobile and social
apps
To improve customer experience…
58%
Marketing for products, services
50%
To sell products, services
46%
Reduce customer service costs
43%
Charge for apps
None of above, just internal use
24%
2%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 524

10. High satisfaction rates for key app objectives
Satisfaction with apps’ commercial objectives
To improve customer experience of
our products, services
40%
38%
Marketing for products, services
39%
38%
To sell products, services
37%
Reduce customer service costs
38%
Charge for apps
28%
Internal use by employees
29%
32%
38%
0%
Very satisfied
35%
20%
34%
40%
60%
80%
100%
Somewhat satisfied
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 517

11. Seeking EU first; US, E. Europe, Nordic regions on radar
Other target markets
UK
France
Germany
Spain
Italy
USA, N. America
Eastern Europe
Nordic
China
Japan
Russia
Asia-Pacific
India, Southern Asia
Africa
41%
41%
40%
36%
35%
26%
25%
22%
17%
13%
12%
12%
9%
9%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 524

12. One third target alternative phones, social nets
Supported apps environments
Android phone
72%
Android tablet
63%
iPhone
71%
iPad
61%
Other phone
35%
Other tablet
26%
Social network
35%
Smart TV
14%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 522

13. Plenty of new apps, but growth rate flat
Number of apps developed, planned
5%
One
24%
2-3
21%
4-6
24%
7-15
16-30
12%
More than 30
Next year
Last year
12%
2%
None
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 522

14. Nearly 30% of companies hired 10+ developers last year
Number of app developers added last year
1-2
23%
3-5
15%
6-10
15%
11-30
12%
31-50
8%
51-100
4%
101-500
2%
More than 500
2%
None
19%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 521

15. Good growth: one fourth expect to grow over 5%
Expected growth in number of app developers
next year
1-2%
3-5%
6-7%
Testing, support
Scripters, designers
Engineers, coders
8-10%
11-15%
More than 15%
No growth
0%
20%
40%
60%
80% 100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 519

16. Nearly half 1:1 ratio of support staff to developers
Number of app developers, support staff
1-2
3-5
6-10
11-30
31-50
51-100
101-500
More than 500
0%
20%
40%
App developers
60%
80%
100%
Support staff
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 522

17. Hiring growth even better than for developers
Expected growth in number of app support
personnel next year
1-2%
15%
3-5%
22%
6-7%
17%
8-10%
7%
11-15%
3%
More than 15%
4%
No growth
32%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 517

18. Interviews: Challenges for the Eurapp economy
Environmental
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Platform concentration: US
companies dominate
3+ year lag in adoption
Fragmented markets
Conservative
investors, entrepreneurs
Technical
•
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•
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Cross-platform development
Dev tools, open source
Native language support tools
Lagging 4G
Data portability
Business and Financial
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•
•
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Immature ad market
No standard ad measurement
“currency”
Unwillingness to pay for apps
Low-priced apps
Customer acquisition costs
Access to capital
Resources
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Fewer developers
Lower salaries
Lack of business expertise at tech
startups

19. Fragmented markets, regulation; but no dominant bottleneck
Top 2 European market challenges for apps
App platforms dominated by
Apple, Google, Facebook, etc.
31%
Multiple languages
30%
Inconsistent regulation
28%
Restrictive regulation
24%
Lagging European tech adoption
19%
Small European country markets
19%
Multiple currencies
15%
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 517

20. In-house developers frustrated by platform divergence
Top 2 tech challenges for apps
38%
Lack of cross-platform compatibility
28%
Lagging European 4G adoption
Breadth, depth of API services
19%
Adding social functionality
18%
Dev tools
18%
Difficulty in delivering mobile experience
18%
Immaturity of open-source
tech, community
16%
14%
Data available via API
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 517

21. Talent bottlenecks: salaries, education, business skills
Top 2 resource challenges for European apps
40%
Harder to attract dev talent, low salaries
Relatively less app dev education
33%
Lack of business expertise at startups
32%
Fewer SW companies to spin off
developers
28%
24%
Fewer developers
0%
20%
40%
60%
80%
100%
Source: preliminary Gigaom Research EU ICT developers survey, 3Q 2013 N= 517

22. Key takeaways
• Platform proliferation will take care of itself
• ICT developers highly satisfied with app commercial
effectiveness, investing more in staff
• Half of in-house developers also outsource
• Even more hiring growth in app support than development
• Target markets mostly still in EU
• Key challenges: talent competition, cross-platform development

23. Next steps
• Mapping survey input to forecast model
– Revenue
– Jobs
– New job creation
• Detailed job profiling
• Comparisons with independent developers’ survey, cottage industry
• Take the survey http://eurapp.eu/independent-app-developer-survey