Mobile strategy: Applications are not enough

Originally published by Connected Planet: http://connectedplanetonline.com/commentary/apps-not-enough-081910/

August 19, 2010

Many companies have begun to develop mobile applications. This is good news – embracing the rapidly evolving mobile data revolution and beginning to develop iPhone applications are important advancements. But this step is not enough. Rolling out an iPhone application is not a mobile strategy – it is but one small step. To successfully capitalize on mobile technology, companies need a much expanded road map for mobile strategy development and planning.

Nielsen reported 2009 end-of-year smartphone data penetration at 21%, and that is expected to grow to more than 50% in 2011. However, with 2010 U.S. penetration currently around 25%, organizations must take a hard look at whether their existing "mobile strategy" actually reaches their customers.

Today, companies are not reaching enough customers with their iPhone apps. The iPhone applications marketplace is the dominant distribution channel for mobile applications. However, the absolute largest market size for an iPhone application is currently only 8% of mobile phone customers (25% smartphone penetration * 28% iPhone penetration * 80% of users who actually download apps). A business case for an example company with a 25% market penetration (share of available customers) deploying an iPhone app should therefore include no more than 1% of their customers.


Companies need to build an app for Android. Adding an Android app increases the potential customer penetration to 2%. If Nielsen’s 50% number is correct, we predict a 6% to 7% total penetration of Apple + Android users.

For some functions, only messaging is needed. Companies must take a holistic look at how they interact with their customers digitally and then determine which functions and features could or should be extended to a mobile environment. To generate scale, and not face the 2% app fragmentation problem, multiple mobile technologies should be brought together, including SMS and MMS. For example, Singapore Airlines allows check-in for flights by sending a SMS message – smartphones are not needed.


Some services will be better served by a link to a Web site, rather than an application resident on the mobile deck. Device enablement and adoption of HTML5 will result in a return to the past when full applications did not need to be native on mobile devices. Remember WAP pages? HTML5 also enables organizations to design and support a single user experience rather than separate interfaces. In the future, when companies have an SMS/MMS platform for feature phones and a Web page for smartphones, adoption will only be limited by how many customers they can convince to interact with their mobile brand, rather than which of their customers can actually use the native application. Take rates will then reach double digits, generating scale in mobile brand-building and functionality, not just iPhone sizzle.


As an example, the movie ticketing company Fandango delivers its mobile experience in all the ways we have described. Ticket confirmations are currently sent by SMS, MMS, e-mail and mobile app – whichever way the customer prefers. Fandango has currently deployed applications for Apple, BlackBerry, Palm, and Android, and it has a Windows app forthcoming. Customers can purchase tickets directly through their mobile app, and Fandango is developing a scanable bar code (similar to what several airlines have deployed) so that the mobile screen can replace the paper ticket. SMS can be better leveraged to deliver real-time information to all mobile customers. MMS can also be better employed. Fandango sends confirmation images by MMS, for example, when e-mail or applications are unavailable.

All too often, customer needs and desires are under-considered in the quest to launch a new technology, service or product. A successful mobile strategy cannot be solely based on an iPhone or Android app. And companies can improve their mobile strategy development by having a co-creative conversation with customers about their mobile business and personal lifestyles and needs.

Michael Morgenstern is a principal with Marconi Pacific, a strategy and operations consulting firm in Washington, D.C., focused on telecommunications, media and technology.