Tuesday, July 19, 2011

A quick survey of the App Store on my iPad - Market size, strategy and audience matter

I was doing some market research for an upcoming app that I'm mentally planning out and I did a quick survey on my iPad.  There are currently 105,233 apps that can be installed for the iPad.

This includes:
  • iPad only Apps
  • Apps that are built for iPhone and iPad (Universal)
  • Apps that are built for iPhone but also can run on iPad
I'm not totally sure where the other 300,000 apps are.  Are they apps which are built for iPhone but specifically exclude the iPad/iPod touch?  Nonetheless this site has more stats.

Here is the break down of apps per category:
  • Books - 20028
  • Business - 4195
  • Education - 12557
  • Entertainment - 8377
  • Finance - 1666
  • Games - 15728
  • Healthcare & Fitness - 1936
  • Lifestyle - 6717
  • Medical - 2054
  • Music - 3558
  • Navigation - 1929
  • News - 3385
  • Photography - 2372
  • Productivity - 3099
  • References - 4533
  • Social Networking - 1179
  • Sports - 2238
  • Travel - 4930
  • Utilities - 4326
  • Weather - 424

It's pretty interesting because it's kind of like the Dewey Decimal system where books are divided up into 10 main classes.  It's a system which felt strange to me growing up because you would have a disproportionate amount of books dedicated to different classes and numbers.  I remember section on computers because there were always crammed at the start of the series from 000 to 006.  It meant that you were always wedged at the outer limits and usually the corners of the library.  So when you break it down and define categories you will always have disproportionate sample set sizes.

Anyway, what interests me is the concept of 'market' size.  In business you have industries and markets.  For example, I learned early on in my career working for the transportation industry that being an industry that's based around the price of fuel that profits come from heavy efficiencies and cost cutting.  But generally it's a low margin industry.  Eventually if a market has low margins and players become established there will be consolidation as the market can't sustain so many companies.

It's the same with apps.  Market size makes a difference.  What is the current size of an app store category vs. average sell price vs. users who will buy an app?  Is an undersized market just an undersized category or is it an under served market where your app will stand out with less competition?

The largest overall category on the App Store is Games which is so big it's the only category on the iPad App Store application which is broken out into sub-categories.  By recent count there are 71,114 active games in the App Store.  If you decide to step into such a well established market you need do your research.  It's like deciding to put out a restaurant in a food court at the shopping mall.

If we tackle games, the questions you need to ask yourself when even planning to make a game are:
 - What is the current landscape for my potential game?  Are there similar competing games?
 - Is the market for this type of game saturated (Angry Birds clones)?
 - If the market is not saturated then is there a pre-established audience?
 - If there is no pre-established audience then does my game have instant widespread appeal?

To put out a game, you need to understand the App Store game.  I liken it to the music industry which has charts.  You can work months and years to make an album but if your trends are wrong then all your up front costs will never have a chance to recoup.  If you fail to rank and gather air play in the first few weeks, you may never have a hit on your hands.

The consequences of not doing your research are you may end up submitting your app into an over saturated market hitting all the wrong selling points.   You may end up scrambling to build a strategy when it's too late.