Mobile-app makers prepare for a gold rush

SAN FRANCISCO, Calif.--A renaissance is under way in the world of mobile-application development.

Less than five years ago, developers were just beginning to create high-bandwidth media apps with the help of freshly-introduced 3G wireless data networks. But the carriers weren't quite ready to open up that fire hose. Nor were the hardware makers, who were creating hardware designed mainly for business users who wanted to check e-mail and play a hand or two of solitaire.

Fast forward to now. Both sides are reaching a kind of equilibrium. Smart phones and handhelds like the iPod Touch, Nintendo DSi, and PSP Go now come bundled with application stores. And those applications on the mobile side can slurp up high-speed data from networks that are becoming larger, faster, and hardened for heavy use. But with that equilibrium, application makers have a problem: there's a lot of competition.

And it's getting worse.

At blog VentureBeat's DiscoveryBeat event Tuesday night, developers (the majority of which professed via a public hand raise to creating mainly for the iPhone) were given a seminar by those who have already had to tackle the challenge of gaining user attention, and who came out on top. The most prevalent solution? Build something fast, then move on. If it sticks, and people like it, great. If not, you've got other things you're working on. And hey, if you've got some cash to throw around, advertise it somewhere!

Though where to spend that marketing money has also become an increasingly complicated endeavor. Developers with new apps can throw their money into a public relations firm who they hope knows how to pitch the right people and build an advertising campaign. But that may not be as enticing as using one of the next-generation ad platforms that have cropped up, like AdMob (now owned by Google), PurpleTalk, or Medialets . These services have found creative ways to promote iPhone apps within other apps, or at least make a free app profitable by sticking advertising within it.

At the event, one of these companies, called Flurry Analytics, pitched its middleman service, which was launched last month. It offers both an analytics engine for mobile applications, as well as something called AppCircle, which serves app recommendations to users based on how they've used the apps that are a part of the program. In turn, when one of those apps gets purchased as part of a recommendation, both the app that's serving the ad, and Flurry get a cut of the sale. Apple, on the other hand, bases its recommendations off what's installed on one user's device compared to a group of other users who may have some of those same apps, too.

Through its analytics service, Flurry has seen a rise in developers that have bucked the trend of being steamrolled by larger companies. In a panel on how to create apps, Flurry Vice President of Marketing Peter Farago highlighted that the little guys have just as much of a chance to make it big. "Many more companies are making a lot more money," he said. "It's not like a South American country where one percent of the population has all of the wealth." Earlier in the evening, Flurry's CEO Simon Khalaf had even compared today's application marketplace to the beginnings of the automotive industry.

Size can be a problem though. While the iPhone's more than 50 million users and 100,000 applications are impressive, that still represents a fraction of the mobile-phone market at large. Knowing this, companies like YouWeb have stepped in to expand how many places a developer's app can show up.

On Monday, the company launched a product called Sibblingz that helps developers set up their titles to work on the iPhone as well as on places like Facebook or on a standalone site. YouWeb founder Peter Relan said his company had seen user engagement go way up when a user was able to access that same app no matter where they were, or what device they were using. He also noted that there are a whole lot more people with access to a Web browser than a smartphone with a data plan, which gives app developers the potential for a much larger user base.

Still, a lot of it boils down to pure luck. As Smule's co-founder Ge Wang mentioned in a panel, his company's Ocarina app (which simulates a pan flute) was released at a time when few other audio apps were taking advantage of the iPhone's microphone hardware. As a result, users flocked to it, making it a top-selling app. Wang also underscored the importance of rapid development, which Smule was known for at least early on. It was releasing its audio-focused apps just weeks apart from one another. But that has since stopped. The company's latest app, "I Am T-Pain" has been on Apple's top charts since September, and this week was picked as one of the best apps of the year by Apple--a move which is sure to bring more sales.

And that's another thing that kept coming up: developers need support from the companies who run these stores. In the case of Apple's App Store, that's especially true. Apps or games that get a nod from the media can have a flash-in-the pan on the top paid or free charts. But getting featured by Apple somewhere within the iTunes store, or in one of its print ads can create a large spike in sales that lasts for a week or more (that's the time between iTunes store refreshes), with a strong, residual effect shortly thereafter due to a higher spot in the charts. A recent example of this came from developer Return7, whose Billminder app sales skyrocketed after being featured.

Where that balance in power could change is with more solutions like Flurry's AppCircle, and with standalone recommendation apps such as the recently-launched Chorus service. Seeing that, Apple and the other app store owners must be cooking up something that will keep both users and developers within their respective ecosystem. In the meantime, it's anyone's game.