Our developer survey gives us an unique perspective into the apps ecosystem, and sometimes throws up a few surprising results. While Android was the runaway leader in terms of the sheer number of developers creating apps for the platform, it wasn't ranked as the most important platform. In fact, it only came third in that race. The most developers creating apps for the platform, yet Android was only third place in terms of importance... can you guess the leaders?

Perhaps not surprising, the honor of "most important" went to Apple. No prizes for guessing that! But Android was pushed into third place by HTML5. Treat yourself to a pat on the back if you guessed this surprising result. Yet it's an understandable result if you consider that HTML5 is supported by all the platforms. Perhaps the result is a reflection more on the uncertainty surrounding which platforms will be the long term winners, rather than on the prospects of HTML5 itself.

Clients can read the full results and analysis in the research note, Developer Insight: Platform Loyalty.

Launched with some fanfare only 10 days ago, and with over half a million installs already, Facebook Home is the company’s attempt to enforce itself in the mobile space. We wrote about it on the launch day – clients can read the report here.

With 1 billion active users, 680 million are using Facebook on mobile. Half a million installs is a pretty low percentage of those users – even lower than Facebook’s mobile revenues which are a remarkably low 23% of total, given that 68% of usage is on mobile devices. Can Home help raise the bar? Ten days’ worth of reviews on the Google Play store don’t seem to give much cause for cheer.

With an average rating of only 2.2, and a remarkable 53% of users giving the app only a 1 star rating, it’s becoming clear that Facebook Home isn’t resonating with users. Why is that? I took a look at the 100 most recent reviews and found the following top concerns:

• 50% of all reviews mentioned increased difficulty using other apps and widgets (even some of the positive reviews)
• 14% of reviewers used the word “uninstall”
• 7% mentioned battery life concerns

Other opinions were generally quite mixed; concerns included privacy, problems installing or running on specific devices, increased data traffic, but none of these were mentioned by more than 3% of the reviews examined. Overall nothing compared to the feeling that most users had – Facebook Home takes over your phone. All widgets disappeared and were unusable, other apps were harder to find and use, and in some cases basic phone functionality became harder to access.

People use Facebook a lot on their phone, that’s for sure, but they don’t want it to become their phone. The phone is an intensely personal device and while Facebook may be a popular app, it's not the only app users want. The design philosophy of Home is thus flawed, in my opinion - it doesnt offer anything to enhance the user's experience of Facebook and hamstrings the other functionality of the device.

If it's to become a success, Facebook Home has to offer some novel services to lock-in power users and provide value in giving Facebook control of their most personal thing, i.e. their phone. Chat heads won’t cut it.

Put on your Google Glass. What can you see? No advertising, at least not from anyone except Google. Probably precious few apps, either, I’d imagine, since Google has announced some “interesting” rules for developers – you can’t charge for Glass apps, and you can’t include advertising. So at the moment (and admittedly this is beta launch) there’s no way for anyone (except Google of course) to make money. So there’s no incentive for developers to create anything for a device which, with this set of rules, becomes a de facto closed garden. Quite the opposite of Google’s usual open philosophy.

Since this is still a beta there is of course scope for those rules to change in future. If/when it does change, then developers may receive a return on their investment, and at that point we may see a good selection of quality apps emerge. Until that point, there will emerge some apps, but they are going to be little more than case studies, interesting but underdeveloped ideas. Glass also links up with the smartphone, a platform on which developers can charge for apps. So in all likelihood the best apps for Glass are going to be extensions of smartphone apps; putting in front of your eyes information you would otherwise have to glance down at your smartphone to see. While this gives imaginative developers a chance at differentiation, the lack of any financial returns is likely to see the focus remain on the phone and not on the Glass.

Will a few underdeveloped ideas and smartphone app extensions be enough to drive a market for an entirely new product category? The device is already causing enough controversy, can it achieve success without a bunch of killer apps as well?

On February 11th, Nike announced that it had ceased efforts to build an Android companion app for its FuelBand. With Google Play getting ever closer to Apple’s massive title library one company’s decision to ignore the platform surely isn’t a big deal – right?

Wrong.

As we move into the App Economy 3.0 – an era where less cutting edge consumers and a more mainstream market drives app usage – the importance of big brands (from Tesco to Nike to Gillette) will be imperative to making a platform a component of a user’s everyday life.

In fact, we will be exploring this in more in depth soon by evaluating top companies in various industries and their app strategies across platforms. For example, when American Airlines rebranded on January 23 it had new apps available on iOS and Android immediately. It has yet - as of 2/14 – updated its Windows Phone app and did not have an app available for the launch of BlackBerry 10.

But back to Nike. Nike has long been extending its brand beyond footwear and apparel – innovating  with Apple on Nike + for iPod way back in 2006 – which allowed users to track their runs on their iPod/computer. Even before apps were mainstream apps were critical component in Nike’s transition.

Thus, Nike’s decision to jilt Android after explicitly stating last summer its plans to support the platform is troubling. While Nike hasn’t stated their reasons for abandoning its effort idle speculation should focus on one of three possibilities:

1. Android Fragmentation simply made it too difficult/expensive to support Android globally (a reason – according to our forthcoming developer survey – why other developers are abandoning the platform)

2. Android fragmentation makes it difficult to provide a consistently high quality experience across Android devices, and all but impossible for Nike to support every Android device. Nike then can’t use a nice, simple marketing message saying “we support Android” in the same way that they can say “we support iPhone”

3. Android users are not as into apps as iOS users and therefore the ROI for building an app simply wasn’t there

To further frame the issues we should note that Nike earned $6B in its last fiscal quarter. The company generated nearly $400M in net income. And despite the billions in earnings the company has decided for whatever reason not to support Android. It certainly was the result of not enough return on investment. The abandonment comes despite having 3 other Android apps, including Nike+Running which has been downloaded between 1-5M times.  However, Nike has 11 iOS apps available.

As discussed in CES 2013: Apps Drive Billions in Revenue, Trillions in Value most companies that are building innovative new apps are focusing on iOS. Mattel, Lego, Nike, and others see the iOS ecosystem as a premium platform on which to reach the most engaged users. If this continues to be the perception than other platforms could be exiled to secondary status as Apple continues to improve its value proposition to end users and cement its role as a mobile leader.

Big brands are the future. Independent developers remain important but large brands will be the driving force behind the app market moving forward. Failure to win brand support will be a bigger blow to a platform than not having a million apps and if Nike is any indication of a trend those in the Android ecosystem should be worried.

The app market continues to grow. In the last year virtual goods and subscription business models have joined paid downloads and advertising as critical revenue drivers for the ecosystem. In fact, the app market will exceed $35B thru 2017 as seen in the chart below as the ecosystem is fueled by new business models, broader device penetration, and continued consumer interest in apps.

Some key findings from our forecast:

• More than 350B downloads from 2008 - 2017
• Revenue from apps will exceed $35B by 2017
• The Apple app store and Google Play will account for most of the revenue developers earn during the forecast period
• Paid downloads begin to decline in 2014 and lose their dominance as a % of the total revenue stream during the forecast period

In order to provide the granular data our clients expect we have re-vamped our apps forecast - improved the methodology - and will now be publishing several models - each broken down by storefront (ie BlackBerry App World) and device type (ie Tablet). The forecast has also been extended to 2017. The models include:

1. Revenue Forecast. This model will provide the revenue earned frome each revenue stream (paid downloads, in-app advertising, virtual goods sales, and subscription) as well as market share data for each of the storefronts (i.e. Google Play, Amazon, etc.)
2. Downloads Forecast. This model provides the number of free and paid apps for each of the storefronts, download ASP, market share data, and revenue from paid downloads
3. Virtual Goods Forecast. This model provides insight into the number of VG transactions per platform, ASP of virtual goods, and revenue from virtual goods
4. In-App Advertising Forecast. This model provides a view of the number of impressions for each platform, the CPM for these impressions, and the total revenue generated by in-app advertising
5. Subscription Revenue. This model provides the number of active subscriptions, the ASP of each subscription, and the total revenue generated by subscriptions
6. Category Forecast. Leveraging data from our AppTRAX database we will provide a look at the number of free and paid downloads per category for several storefronts as well as download revenue

Overall, these new models will provide clients with unprecedented insight into the apps market. The Strategy Analytics Report Mobile App Revenue Forecast 2008 - 2017 has already been published and is avalable for App Ecosystem Opportunity clients. The remaining models will be published throughout November.

For further information on the forecasts please e-mail JMartin@strategyanalytics.com.

Here at Strategy Analytics we love apps. We track the top apps in our database, AppTRAX. We forecast downloads and revenue. We track app store competitiveness. We survey developers. Most of my waking hours – and sadly a few sleeping ones – are spent considering the future of the app ecosystem.

So, it should come as no surprise that we also track app availability. But tracking app availability is tricky because it is important not to frame the conversation as the store with the most apps is the bestsimply due to its massive virtual shelves alone. In fact, the debate between quality and quantity is complicated. There is a fine line between having enough high quality apps and assuring users that your platform is a priority for developers.

And that is the purpose of our Quarterly App Marketshare Tracker. To use data to answer important questions such as:

• Which platforms are gaining momentum?
• Which app categories are growing or slowing?
• Which new devices are developers interested in supporting?

The result of collecting apps available each month has allowed us to frame the conversation for the remainder of 2012 in the context of three well known battles. The most recent report  App Market Share Tracker Q1 2012: Apple and Android continue the battle for dominance:

• Apple versus Android for the number 1 title. Despite the launch of the new iPad late in the quarter Android continued to gain on Apple’s still massive lead adding 81,000 apps to iPhones 48,000 and iPad’s 34,000.
• BlackBerry versus Windows Phone for third ecosystem. Microsoft has officially pulled ahead of BlackBerry in catalogue size and apps added in the quarter. With Windows 8 and BlackBerry 10 looming the stakes are getting ever larger
• Nook versus Amazon for the tablet of choice. After the Fire flamed in its first quarter the number of apps slowed considerable this quarter but the Nook took little advantage of Amazon as only added 1,600 apps.

As developer are forced to choose between ecosystem, within ecosystem, and determine which devices they want to support doing whatever is possible today to woo developers is essential to building robust ecosystems full of high quality apps, cross-platform experiences, and providing a long term value proposition for consumers and developers.

You know what's cooler than 25 billion downloads? A trillion downloads.

Last weekend, Apple announced its App Store had surpassed 25 billion downloads. Just a few days later Apple is preparing to unveil the iPad 3 - possibly known as the iPad HD - depending on which rumor mongering site you choose to believe. Regardless of the moniker the new device is enshrined with one thing is clear - Apple is dominating the apps market. It's app store has more than 600,000 apps. It's growing 3% or more each month. Apple earns the lions share of paid download revenue in our most recent apps forecast buoyed by the success of the iPad, the continued interest in the iPhone, and the ability to charge a premium for tablet apps. But despite its strong market position the possibility of reaching a trillion downloads remains slim. Why?

The case against reaching 1 Trillion downloads:

1. Universal apps limiting the need to download the same app (think Angry Birds and Angry Birds HD) for each device you own it on instead one app can be used on multiple devices within an ecosystem (such as Infinity Blade)

2. HTML5 might be small potatoes today but in the future developers will begin to experiment with distirbuting HTML5 apps outside OEM app stores. HTML5 may not represent a significant part of the market but it could pull enough downloads away from OEMs to prevent them from reachin 1 trillion

3. Facebook will become an increasingly important app distribution platform - as seen by its announcements at CES - and could lead the next wave in app distribution short circuiting the volume needed to reach 1 trillion (although Facebook itself one day could view for 1 trillion downloads)

For more in-depth analysis about the case against Apple, the case for Apple (and others) reaching 1 trillion downloads, and the impact such a milestone would have on the industry see the Strategy Analytics Insight; You know what cooler than a billion? A trillion.

Mobile World Congress recently concluded but despite the show ending, the impact of the announcements have only begun to have an impact on the apps market. In fact, the announcements at MWC will shape ecosystem battles, competition within an ecosystem, and see new threats emerge. The impact of these events are discussed in the recent Strategy Analytics Insight; Mobile World Congress 2012: New threats emerge as Apps competition gets fierce.

The biggest stories at MWC included:

Ecosystem Differentiation

• Apple casting a shadow over Google's press conference by inviting the press to the launch of the iPad 3
• Microsoft redefining the PC-mobile app relationship with the launch of Windows 8 Consumer Preview

Intra-Ecosystem Differentiation

• Nokia launching more of its own branded apps and hardware - the 41MP Pureview - that will set it apart from other Windows Phone players (if/when the technology comes to the Lumia product line)
• Samsung leveraging the S-Pen to offer a differentiated experience to users and developers

New Competition Emerging

• Opera launching a new App Store to take advantage of its large user base
• Facebook quietly become a key plaey in app distribution

To understand how these and other stories will shape the future of the apps ecosystem see the insight; Mobile World Congress 2012: New threats emerge as Apps competition gets fierce.

Much ink will be spilled today over the impact of Facebook’s recently released Messenger app for iPhone and Android. In fact, we suggested they do the same thing in a report about a month ago. And while I often prefer to play the contrarian to the breathless media hype over the newest shiny object this is one occasion to get swept up in the hype.

Clearly the popularity of Facebook was and will not be limited to Facebook developed apps as many third party offerings exist. But Facebook’s decision to release its own branded and dedicated app does ensure a much larger audience will a) be aware of the app and b) be willing to download the app.

But it’s just a Messenger app you might say – and one that has much room for improvement. On the surface that is true but the Facebook Messenger app eliminated many of the limitations other competing services suffer from:

• It is truly cross-platform.  Facebook laid the groundwork for a truly cross platform offering when it updated its messaging system to enable communication via Facebook, e-mail, and text. This groundwork will now power its new app enabling users to communicate from practically any device to practically any other device. Some of this functionality is “borrowed” from other key innovators such as WhatsApp but Facebook will bring it mainstream.
•  Huge User Base. More than 750 million people are registered for Facebook and ubiquity is imperative in building momentum for these types of services – as seen in the chart below – an Facebook has ubiquity. Many of these users have avoided third party messaging or Facebook apps because they were not Facebook sponsored. That will not be the case anymore as usage grows exponentially.

While the Facebook app might eventually have an impact on carrier text messaging services few users are calling AT&T this morning to cancel their plans. No, the real impact is just on a little thing called the future of mobility with wide ranging impacts on platforms and services. RIM will clearly be impacted, Apple’s iMessage may already feel stale when it is released, WhatsApp may struggle to continue to grow, and Google’s Huddle may also find less headroom in the market.

This decision is one of many that continues to place Facebook squarely in the center of mobile and non-mobile interactions. It is clear how the app will impact text based communication. Apps will also be impacted. Already many apps use Facebook to enable competition amongst friends and post achievements to a user’s wall in clear competition with Apple’s GameCenter and eventually with RIM’s more social BlackBerry Messenger 6. Facebook could easily antiquate both offerings easily with its vast reach. And if/once they resolve integrating Skype into their website and mobile client broader change will be afoot.

But not everything will play out in Facebook’s favor. The company has a history of releasing products that user’s do not care for (see reaction to every homepage revision Facebook has ever made for proof). Mobile OS developers will continue to evolve services to keep up with and ahead of Facebook. Finally Facebook fatigue is already setting in with growth stalling in recent months. All these factors could impact Facebook’s growth. But in spite of all this it should now be clear that mobile dominance is Facebook’s and not Apple’s to lose.

*Universe of users is based on both publicly available information and SA estimates of installed base of iPhone devices