Facebook – the 800lb gorilla of social networking – had decided to dip its oversized toe into the app distribution pool. While Facebook would seem assured of success its past effort – the App Directory – failed to establish Facebook as a kingmaker in app distribution eventually resulting in its shuttering in 2011. In fact, Facebook will have a challenge on its hands to get the App Center up and running with less than 12% of developers distributing apps via Facebook today, according to our recent developer survey.

But the times they are a-changing and as apps become increasingly important to how users consume content and interact with the world at large. The moment presents an opportunity for Facebook. But how can Facebook avoid past mistakes while differentiating from a crowded marketplace?

Let users see the big picture. If you want a phone or tablet application there are plenty of locations to find apps. However, if you’re looking for an app that spans your phone, tablet, TV, PC and other devices (especially if all these devices run on different operating systems) you need to search multiple stores. Facebook – by providing access to apps across a broad range of devices and operating systems could provide a more holistic view for users.

 Leverage Social Discovery. Most app stores fail miserably when it comes to discovery. A top 100 list is just a self-fulfilling prophecy increasingly dominated by fewer and fewer developers. Some innovation has taken place such as BlackBerry integrating app discovery into BBM (discussed here). But the market must go further and it is clear that discovery will be the next major battleground for app stores. Social discovery is Facebook's bread and butter and is something the company should excel at.

 Use Facebook connect (and all data). Our recent developer survey showed that the most popular social network integrated into apps is Facebook with more than 80% of developers integrating it. Therefore, Facebook should have a good sense of the apps you are using, how often you use them, who you are playing against, and more. By leveraging this information (in addition to the social graph) Facebook could create more tailored recommendations engine (let alone offering social discovery from the friends you play with most) on apps for your smartphone, tablet, and more.

Provide glue between platforms. Apple has attempted to create a more holistic experience across its portfolio by allowing developers to use iCloud to save app data – in theory allowing a user to start a game on an iPhone and finish it on an iPad. Facebook can bring this to a whole new level as apps become ubiquitous across more platforms by allowing users to take an experience from iPhone to Android to any other device the app is on.

In short, the opportunity for Facebook is huge but there is no guarantee of success. However, one thing is sure – if Facebook does become a key player in app distribution – it will further cement its importance at the center of the social universe. For more in-depth analysis on what Facebook’s launch means to the apps ecosystem read this report; Even Facebook doesn’t “Like” CTIA

For many years I have lived in the Apple ecosystem. I own an iPhone 4. I own an iPad 2. But recently my fervor has ebbed. Case in point, I did not upgrade to the iPhone 4S instead sticking with my trusty iPhone 4 and I wasn’t on line when the new iPad debuted as I was when the iPad 2 launched last year. I even stuck with Google Sync in lieu of iCloud for e-mail and contacts. My interest in Windows Phone has been well documented.

In the midst of these thoughts, Apple provided me with an evaluation Apple TV and new iPad and for a few weeks I immersed in the Apple bubble again. Here is why the Apple ecosystem is so compelling:

1. The new iPad screen is amazing. OK, this is not related to the ecosystem but bears mentioning. This is no surprise as it was the showstopper when the device was announced. As an iPhone 4 owner I often found myself using my phone instead of my iPad to surf the web. The new iPad has begun to change that dynamic and helps embed the value proposition of the iPad but I still find myself frequently using my phone. I did in fact expect the transition to be more dramatic. Regardless, it will be difficult going back to the iPad 2.
2. There are many more universal apps. Last year developers were building some universal apps – those that provide a unique experience for the iPhone and the iPad - without the need to purchase or download two apps. But now universal apps are everywhere. The increase in universal apps is important because it makes owning an iPad more cost effective than buying apps for each device. To Apple’s benefit universal apps increase the value of the ecosystem while making it harder to leave. I have used a number of universal apps during my test and the interplay between iPhone and iPad is seamless and iCloud delivering my downloads to all my devices eliminates a cumbersome step. And did I mention how nice the apps look on the new screen? 
3. Apple TV shows the power of iCloud. I questioned the value of iCloud – specifically being able to stream the content I purchased from iTunes or match the music content I ripped (from my personal library of course). But I was being a bit myopic only thinking about how it would impact my iPhone or iPad use. But the use-case extends well beyond that as I learned over several long sleepless nights with a teething baby. Without the need for my computer to be on I was able to watch many programs that I had purchased over the years or download new ones. It all just appeared and within a few clicks I was watching Community and laughing just quietly enough to avoid rousing the baby. The additional benefit is being able to access the content on my computer as well providing me with a huge cache of digital files to enjoy –assuming I remember to wake my computer - because for some reason you seemingly cannot wake a Mac via LAN unless you are using Airport. Despite this, I can see how an easy to use Apple Television could excite users. 
4. Apple’s content creation apps are compelling. Apple has put the proverbial wood behind the arrow by making content creation apps that are not only easy to use on the iPad but are also universal as well. Notes, Pages, Garage Band, iMovie all let you create interesting content easily. These apps again demonstrate the power of iCloud and the ecosystem as I can easily access files on other devices or immediately listen to or watch them on TV via Airplay. I feel sorry for visitors who will now be so easily subjected to hours of home movies – beautiful and well scored home movies mind you – but still home movies they are forced to endure.
5. Unique Apps are Apple’s forte. In fact, in the SA AppTRAX Insight: The New iPad is a look into Apple's Future we found that Android offered only a fraction of the titles available on iPad and a number of these apps did not offer unique tablet experiences. So, Apple has high quality, unique, beautiful apps. That’s a winning value proposition. 

So, what does this all mean? Is Apple unstoppable? Am I back in the bubble for good?

In short, the answer is no. However an interesting change is happening at Apple. Instead of new products that individually revolutionize a category each year the company is building devices that complement each other more effectively. iCloud is a huge improvement over MobileMe and really serves as the foundation of the ecosystem in a way I didn’t expect. The new iPad while not wildly different from the iPad 2 does offer a sea change in usability due to the much improved screen. The Apple TV is compelling for those with large libraries or those wanting an easy way to get self-created content on the TV for viewing. In time perhaps the Mac will be engulfed into this ecosystem as well further extending the halo effect that iOS has had on many products. And let’s not forget that rumored Apple Television we hear so much about.

So, Apple is no longer truly competing with one device as the iPod did with Zune (if you think the Zune ever really competed with the iPad) or a one device operating system. It has already extended beyond that and for me – as I begin to consider my next phone – it is difficult to opt out of such a robust and fully formed ecosystem. I, like many others am doubly conflicted after investing so much in apps over the last 3 years. It will be interesting to see how/if Microsoft can use Xbox, Windows Phone, Tablets, and PCs to position Windows 8 as an equally compelling alternative ecosystem because the metro UI is so different from iOS. And Microsoft has the assets to quickly create a holistic ecosystem. As Google begins to improve tablet apps and combine user data more effectively they too might create a compelling ecosystem. But even if wildly successful it will take time to match the robustness of Apple’s ecosystem and all the while iOS will continue to evolve. And while others are playing catch-up Apple keeps moving forward.

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.

Instagram was acquired by Facebook for $1B. So far this year Instagram has appeared almost without fail in the top 300 free iPhone apps tracked in the 107 countries in our AppTRAX database. The only occassional miss is China where Instagram sometimes failed to make the list. While the numbers are encouraging (but average rank isn't stellar) and shows the App Economy can mint billion dollar valuations in a short time Instagram failed to reach the top grossing iPhone list. While Instagram generates revenue outside the bounds of Apple's accounting system it does show that Facebook didn't buy Instagram for existing revenue streams. Instead and again we see an acquisition take place before an app becomes even more popular - as we saw with OMGPOP a few weeks ago and as we see again with this acqusition as Instagram had just launched its Android app a week ago. Below are details from the AppTRAX database to further highlight the performance of Instagram each week this year.

Angry Birds Space IS coming to Windows Phone! Angry Birds Space IS NOT coming to Windows Phone! The destination of the irritated avians has been much discussed this week. Despite the hullabaloo it is confirmed that Rovio will make their 10M download strong game available on Windows Phone. But the tenor of the conversation around Angry Birds continues to cast Windows Phone as a second thought to iOS and Android. Supporting these platforms at launch was essential to Rovio while Windows was secondary.

Microsoft’s mission is to make certain that Windows Phone rises into the echelon of platforms developers must support. So far, Microsoft has made important strides in its mission. Developers showed very high enthusiasm for the platform in our developer survey last year; Developer Survey Says: We believe in Windows Phone and love the iPad. Early data from our survey currently in the field has developers saying that Nokia’s Lumia launch has further cemented their interest in the platform.

But despite these improvements in perception Microsoft and Nokia must do more than growing the installed base of devices. So, on Monday March 26^th Nokia and Microsoft announced the formation of the AppCampus at Finland’s Aalto University. The program has been endowed by its creators with $25M to accomplish its mission of helping developers boldly build metro apps that no one has built before.

Since partnering with Microsoft, Nokia has been working with local developers to help them succeed on Windows Phone. Now Microsoft and Nokia are launching the next step in developer support with AppCampus. But AppCampus is not only meant to raise awareness it is meant to help developers overcome a big obstacle which happens to be the biggest differentiation for Windows Phone – The Metro UI. Many users, me included are fans of the user interface Microsoft has introduced. It is not surprising then that Microsoft wants the Metro UI at the core of each app.

In Android and iOS apps are coded in C++, whereas for Windows Phone C# is the required language, adding another hurdle. Thus, developers cannot simply port apps from Android or iOS. Instead, developers must re-think their apps from the ground up to take advantage of Windows Phone while also learning and perfecting the C# programming language.  And re-thinking, re-coding and re-distributing takes time. If Microsoft can help developers speed up the process they can get more metro apps into the marketplace that will distinguish the platform. Nokia will benefits through supporting the program by possibly getting early exclusive access to apps. And developers stand to benefit from the extra support and expertise available through the program.

AppCampus should be the beginning of enhanced developer support. Programs like the iFund have done wonders to promote innovation in app development and Microsoft and Nokia should consider a similar offering to spur development further. For now though, AppCampus will be a reminder of Microsoft and Nokia’s commitment to the platform while serving as a vehicle to improve developer relations.

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.

Barnes and Noble and Amazon. Their epic battle for book supremacy dates back to a century long past. It was a simpler time - 1995. Back in the '90's (as we called them back then) the battle between the established B&N and the upstart Amazon.com was about books. But today, more than 15 years after the first arrows were fired the battle has moved to the digital world. It's not just about e-books either. Now, it's about all sorts of digital content. Including apps.

So, while Apple and Amazon dominate marketshare and net new app additions each quarter the more interesting battle (until the Android Market gets closer to catching Apple) is between the two companies helping bring the low cost tablet to the masses. In the recently launched App Marketshare Tracker for Q4 it is clear which platform developers prefer; Amazon. Despite the Kindle Fire launching in mid Q4 Amazon's aggressive effort to court developers has allowed its Kindle Fire app store to already eclipse the established B&N store. In fact by the end of the quarter Amazon had more than 13,000 Kindle Fire Apps available while Barnes and Noble only offered 2,000 Nook apps. And while the Nook App Store grew by huge percentages - demonstrating increased developer interest in the platform it still has ways to go to catch up to Amazon.

The battle between Barnes and Noble and Amazon is just one pertinent data point discussed in the report App Marketshare Tracker Q4 - Kindle Catches Fire while Nook Slowly Smolder. 

Other questions addressed include:

• Which categories are growing the fastest?
• How is the battle between Apple and Android shaping up?
• Which ecosystem is winning the battle for third place?

Recently, Nokia provided me with a Lumia 800. It was my first Nokia device in years and the first time I had the opportunity to use the Windows Phone platform. After a week with the device I have formed a number of impressions.

First, the device. I was impressed with the Lumia. I had seen photos online and wasn’t sure how much the device would actually appeal to me. It felt solid, it looked different from what is considered the traditional smartphone form factor these days, and I actually really liked it. Other users have commented on how much they like it as well. So, Nokia did a nice job offering something different into a market full of black slabs.

Before delving into specifics I wanted to share my general impressions of Windows Phone. In short, I really like it. After nearly four years of iPhone ownership I have finally found a device that has won the affection of my Micro-Sim. My favorite things about Windows Phone:

1.       Live Tiles. Live tiles provide a constant flow of information to the tile on your homepage. Did your friend update their Facebook status? That shows up. Did your colleague send a tweet? You’ll see that. I really enjoy the live tiles and for me it is a game changer from a user experience perspective. I love having a live tile for my family, my wife, and my fantasy football league to get quick news updates. Since so many social networks are integrated I have massive amounts of information feeding the live tiles. The same can be said of weather, sports scores, and more. Lots of information – it’s great.

2.       Integration of various social networking into the experience and great group control. Upon turning on my new device for the first time I set-up my LinkedIN, Facebook, Twitter, Windows Live, and various e-mail accounts and the contacts associated with each. One important component is that I can hide contacts from various services but let them appear in searches. This has long been an issue on my iPhone when I connect to Facebook but don’t want any of my “friends” appearing in my contact list. While social networking is not terribly unique the integration into the experience is what makes these services special. Suddenly my address book is so much more valuable to me because it shows me updates from the various services to which my contacts subscribe. The integration also allows me to share information easily amongst my services. Also, you can easily create groups to get or share information with.

3.       It has most of the apps I use. Yes, Windows Phone Marketplace may only have 40,000 apps but more importantly I found most of the apps I use regularly. Yelp – it was there. OpenTable – there too. (No, I don’t only use food apps). Slacker radio, overdrive media console, and many others were there too. There were a few disappointments such as no Sugar Sync or Words with Friends but I’m hoping they’ll come in time. Windows Marketplace has enough to keep me interested and a few unique Xbox games that are unique to the platform.

4.       Contacts. I like having a view of my contacts that shows their updates and our history. Be it text messages, e-mail and more. Furthermore, when you chat with someone it seamlessly integrates various services switching from Text to Facebook to Windows Live in one window.

The positives demonstrate a very different experience from what I’ve had from other smartphones I’ve used and I like it. But there are a few drawbacks as well.

1.       Not enough third party support for Live Tiles. The Live Tiles offer such a differentiated experience that when an app doesn’t offer it they stand out like a sore thumb on my home screen. In fact, I’ve found myself excising apps to the list view if they don’t offer Live Tiles. Another issue is that I don’t know which apps are Live Tile enabled. Microsoft should offer a search parameter for apps that use live tiles. Furthermore, Microsoft should convince developers to leverage live tiles to offer a platform wide differentiated experience.

2.       No ability to organize apps. I have over 150 apps on my iPhone. It’s excessive I know but that’s how many I have and they are stuffed into dozens of virtual folders. On Windows Phone you either have a live tile or an alphabetical list view. It would be nice to have a third screen where you can organize your app list at will or even set-up folders on the home screen which could leverage live tiles to update info from the apps contained there-in.

3.       Set-up could be simplified. I am a tech analyst so figuring things out are in my nature. While Microsoft has done a commendable job with integrating so many services there are issues. My biggest problem was that correlating names between services was a bit of a hassle. If I am Josh Martin on Facebook and Joshua Martin (much more formal, right?) on LinkedIN the system can’t identify that I am the same person. While it is easy to link the accounts it is time consuming. I don’t have many contacts but if I had hundreds of contacts with 3 or 4 services each I need to physically go in and link the contact cards. It’s powerful when it’s done but it should be smarter to limit set-up time. Or perhaps I should ask all my friends to just be more consistent with their names.

4.       Bad video support. I have lots of video – much of which I ripped from my personal DVD collection (Thanks Supreme Court for letting me do that!) but it has been ripped into unprotected ..AVC which my Lumia doesn’t support. With hundreds of videos converting them to another format is too much of a hassle. If there was a more standardized video format across devices that would be great because I would be willing to convert if I knew it would future proof my video collection.

5.       Apps are more expensive. Why is Angry Birds $2.99 on Windows Phone? This is just one example but the store is littered with apps that cost much more in Windows than they do on iPhone. While $2.99 is still cheap it’s 3x the price of the iPhone version. Microsoft will need to work with developers/carriers to keep costs down.

Despite the drawbacks (including the fact that Internet Explorer is terrible) I’m not quite ready to switch back to my iPhone quite yet and I’m not convinced I will ever switch back. Windows Phone has impressed me that much. But only time will tell if I continue on. For now, Microsoft has something different for users and for developers. If Microsoft can get more developers to buy in to the Live Tile concept they will have more to talk about when they pitch the device at retail. Focusing on what makes Windows Phone different will be the key to success.

On 15^th November VISA announced its digital wallet brand and acceptance mark, V.me, which is slated to launch in the US in 2012 and will rival other digital wallets such as PayPal and American Express’ Serve.

V.me will enable financial institution partners (e.g. banks) to offer customers a digital wallet to store their VISA and non-VISA payment account details, which can then be used to make online payments via multiple devices, including PC, tablet and mobile phone. V.me aims to simplify the online shopping experience for consumers by providing click to buy functionality, and to add security by circumventing the need for users to enter and transmit payment information over the internet.

So, other than trying to expand the number of transactions flowing over its payment network why is VISA getting involved?  

Low digital wallet use: Current adoption of digital wallets is relatively low given there will be over 1.5B broadband users by the end of 2011. Internet users remain reluctant to store their payment card details to digital wallets due to security fears.

• PayPal has 103 m active users globally, with most growth in transactions coming via Ebay, the auction site of its parent company. Merchant acceptance of PayPal remains limited.
• Amazon claims “millions” of users have registered their payment card details to its 1-Click digital wallet.

Brand: In 2011 VISA ranked 20 in the top 100 most valuable brands globally and also as the strongest financial service brand. VISA’s trusted brand may help consumers overcome their security fears where others have failed. 

Increasing need for cross platform payments: As internet use expands across multiple device categories, including PCs, mobile phones and tablets, consumers will want to be able to easily pay for goods and services across the range of devices. Access to a digital wallet can in theory provide this simplicity.

• The number of broadband users is set to rise by two thirds to just over 2.57 B by the end of 2016.
• The number of mobile internet users will expand by over 90%, to reach 1.75 B by 2016.

When V.me launches in 2012 it needs to be supported by popular online retailers. As a user why sign up, unless this payment method can be widely supported? Big online retail sites such as Amazon, Ebay and iTunes, with their own digital payment solutions will likely resist, but there are many other e-commerce sites that would benefit.

Banks will also play a critical role in the adoption of the co-branded V.me digital wallets. In my opinion consumers will be more likely to trust the security of a payment service offered by their bank over that of a third party. For this reason alone I expect providers of digital wallet services, including mobile operators (e.g. mPass), to face strong competition from established payment industry players, such as the banks.