4 Companies Poised To Control The New Mobile App Economy

by: AppHead

A monumental shift is occurring among consumers that are now using mobile apps over traditional web sites. It is taking companies by surprise such as Facebook (NASDAQ:FB), Research in Motion (RIMM), Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT), Dell (NASDAQ:DELL) and others. Recently, Facebook and its investors were blindsided by the surprising usage and growth of mobile apps on the mobile Internet of only a handful which are related to Facebook itself. Traditional web site revenue models are not as effective on the new mobile Internet. Right now, companies are testing new revenue strategies for consumers that search for and download mobile apps on iPhones, iPads, Android phones, Samsung (OTC:SSNLF) phones, Windows Mobile phones, Blackberries and of course tablets of all kinds.

Today the world's consumers have access to millions of different mobile apps. Also included are HTML5, web apps and mobile-enabled sites. It is a known fact that mobile apps are driving the sales of mobile devices. Keeping this in mind, there are over one billion smartphones in use around the world and the adoption and growth of these shows no sign of stopping. Add to this millions of tablets and other mobile devices.

Lets take a look at some of the new problems along with new tremendous opportunities that now exist for smart companies willing to take advantage of the transformative mobile app economy.

A New Set of Challenging Problems for Traditional Web-based Companies

Web-based companies like Facebook are seeing a huge shift away from their traditional web-based services to the use of mobile apps to access their services. In addition, something even more significant is happening. Single mobile apps such as Instagram, Angry Birds or Draw Something have the potential of creating their own social and mobile ecosystems with the ability to lure users away from traditional web-based services. With mobile apps like Instagram drawing 30 million users in no time and with the ability to become its own social network, this is a clear threat to traditional web-based companies like Facebook and Twitter. For example, Facebook saw this threat and immediately acquired Instagram for $1 billion dollars, likely to keep it out of the hands of companies like Google (NASDAQ:GOOG) and Twitter. The fact remains that this threat from mobile apps does now go away by removing a single mobile app from the equation as thousands upon thousands of new innovative and disruptive mobile apps are being developed every day. Individual companies alone such as Salesforce (NYSE:CRM) are producing hundreds of mobile apps for their consumers. Another interesting case study in this area is based on what a company called West Pac is doing.

The threat of a mass user exodus is not the only problem facing traditional web-based social networks and services. Monetizing mobile apps has now become a big challenge for old web companies that rely on advertising alone. It is interesting to note that mobile app owners that either charge for their apps or engage in in-app payments and other transactions are doing quite well if their app is popular enough.

New Difficulties for Mobile Device Makers

Companies such as RIM, Nokia are experiencing problems with the sales of their devices. Some companies like HP are completely halting and restarting sales of their devices. They did not realize that consumers expected to find a rich index of relevant, useful and entertaining mobile apps on their mobile devices. In fact, in the early days of mobile apps, some thought, like former RIM co-CEO Jim Ballsillie, that they were just a "fad" like some thought web sites were a fad in the 1990's. As we can see from their current and projected lower sales numbers along with their stock prices, these companies have painfully experienced limited growth in the new world of the mobile Internet. In short, they have experienced, with some continuing to ignore, one very important data point, no apps, no sales. Companies like Microsoft have begun to realize this sea-change to mobile apps and are now offering mobile app developers up to $600,000 to develop apps for mobile devices running Windows Mobile.

Most Importantly, New Difficulties for Consumers

As consumers flock to the mobile Internet via mobile apps, these same consumers are experiencing difficulty in finding mobile apps that are relevant to their daily lives. Consumers had this problem using the Apple (NASDAQ:AAPL) app store. Companies that help consumers find relevant mobile apps are like companies that helped consumers find relevant web sites in the early days of the web-based Internet.

New Opportunities in the Mobile App Economy

A large opportunity now exists for companies that are solving the mobile app search and discovery problem. The importance of a platform where consumers can search, find, discover and download mobile apps is shown by recent strategic positioning made by a few companies to control a "central location" or "gateway" that consumers use to explore mobile apps on the new mobile Internet. The following companies are currently positioned to take advantage of this new problem, which is now an opportunity:


Apple's revenue opportunity is clear in the context of mobile apps. They revenue share with mobile app makers. However, Apple, a company that does not specialize in search technology, noticed the problem consumers were having in searching and discovering mobile apps on its platform and immediately decided to resolve this by acquiring a search company that helps people find mobile apps, called Chomp. Interestingly, in a move that makes sense to Apple alone, they decided to quickly disable the ability for consumers to search and discover Android apps. In terms of iPhone and iPad apps, Apple seems to be making progress in helping people find relevant mobile apps. However, the core of their strategy involves preventing people from knowing about Android apps that may be more relevant to any iPhone or iPad app they might be looking for. It's evident that Apple knows that mobile apps have the ability to convert some consumers from iPhone users to Android users if they happen to find or discover more relevant Android apps.

Mimvi (MIMV.OB)

Mimvi is a search and discovery or recommendation engine for all mobile apps. Some have described it as a "Google" for mobile app search. However, I would disagree and say there is a larger opportunity for a company like Mimvi which could include not only sponsored app results [similar to Google's AdWords] but also revenue sharing based on in-app payments by offering exposure for mobile app developers and owners on its search and recommendation properties. They also seem to be working on an intriguing system like Google's AdSense, called MimviLink, where they match mobile apps to content. This is truly an innovative approach to revenue on the mobile Internet. The Mimvi platform is simple and works on most devices due to the availability of their web app. Google's financial controller recently joined Mimvi and likely to focus on revenue and partnerships. Interestingly, one of Mimvi's primary competitor was Chomp, acquired by Apple. Mimvi has a real chance at being an agnostic central location or gateway for consumers to search and discover mobile apps. Their approach truly can propel them into the go-to place for mobile apps just as Google was propelled into a similar position related to helping people find web sites and no matter what kind of web site it was.


Facebook, after their hood was lifted days before it's IPO debacle, is certainly desperate to attain a footing in the mobile app area. Facebook sends over 160 million people to mobile apps each month. Because of these points, they are releasing the App Center, a central area where users can search for and explore mobile apps. Just as with Mimvi, Facebook shows the user the install page in the Apple App Store or Google Play. One of the concerns for consumers using Facebook's App Center is that they will not being able to search for long-tail mobile apps or apps that aren't connected to Facebook in some way. This is something that would have killed Google if they took this approach with web sites. Another concern for Facebook in this area is that they have no traction in generating revenue in this area. Perhaps Facebook will execute on a model similar to Apple. If so, that could be significant. Facebook still remains a contender in being the gateway for mobile users and their app experiences. Mobile app developers stand to benefit by gaining access to the Facebook user base.


Google recently decided to create an all-you-can eat area where users can search for and explore apps in one central place called Google Play although it's having difficulty expanding in China's $35 billion dollar mobile app market. A key question in what Google intends to offer relates to whether or not Google will put any significant effort into helping find iPhone and iPad apps as those apps drive the sales of competing smartphone platforms.

But Wait, There's More!

Beyond the search and discovery gateway for mobile apps, there is an entire ecosystem of mobile app development, payment and distribution companies such as Glu Mobile (NASDAQ:GLUU), Velti (VELT), Bitzio (OTCPK:BTZO), Epocrates (NASDAQ:EPOC), Mitek (NASDAQ:MITK), MircoStrategy (NASDAQ:MSTR) and others that stand to do quite well and are worth being placed on your watchlist in this new world of the mobile app economy.

What are some of your favorite companies smart enough to execute in the new mobile app economy?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

About this article:

Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here