What does this mean? Well, a little something for everyone.
Platforms
Facebook is leading the charge here, but even after the '5,000 apps and counting' announcement a year ago, it was clear that for a normal user to find and sort through that many available apps was going to be a challenge - even at that time. With boundaries to app development getting lower and the ability to monetize getting easier, the challenge of creating a user-friendly experience for finding apps has only grown. Facebook's Verified App program is a great step here, giving credibility to hopefully some outstanding apps, and verification is something I've been discussing for a year now. But, that's not going to be enough. The FB app directory needs a huge overhaul (OpenSocial directories need this too). Every provider, from Apple to Bebo to MySpace will need to provide more detail to users about each app as they search and browse, so installing the app isn't required to figure out what the thing really does.
Hmm...where else are there tens of thousands of products?
Let's take a look at software download sites like CNET's download.com, eBay and Amazon for some examples of 100k+ items for sale. App listings will need to be filtered and results sorted / refined by multiple factors, including verification, popularity, user-ratings, and maybe a few new factors like a 'usefulness' rating, 'virality' (do people recommend it to their friends on purpose?), and a SPAM rating, and maybe some categories (productivity tool, utility, personals, game, group management, time-waster, etc.). User comments are there today, but a way to quantify these would be more helpful for the fast-reading user. Maybe the app canvas page needs more screenshots, a video demo, and some good usage data (installs v. un-installs is an interesting metric). The more ways to differentiate the app, the better for both the developer and the user.
Better directories mean more users will look for and find apps that are useful to them, driving up time on the site and ad clickthroughs.
Developers
You could see this coming like a train wreck - it's too hard for 'useful' applications to stand out from the crowd on Facebook and other platforms, and just developing a good app isn't good enough. (When I say 'useful' I mean the apps do something other than make you invite your friends to join - a pretty low bar, I know.) Developer emphasis on app virality has been capped in FB and other networks, and is not the way to propagate an app on any mobile platform. What's a developer to do?
I'm predicting that over the next 2 years, we'll see more 'app factories' that roll developers and their apps together under a single company name, much like the organic way that Slide and RockYou developed, but with freelance developers instead of employees.
These 'App Studios' will be able to market the apps on behalf of the developers and split revenues. They will have much more success due to the volumes they can manage and the brand association / credibility they'll be able to create. We'll see an app built for one platform, then under this movie studio model be adapted to multiple platforms and marketed and cross-sold as an incremental addition to a brand portfolio across networks. You'll be able to install an app on your iPhone and Facebook profile, and maintain your single data profile between the two interfaces. This concept really makes sense from a user, developer and investment perspective, it just needs a bit of juice.
Users
Platform users have benefited so far, and will continue to benefit as the platforms and developers make it easier to determine what's good, what works and what doesn't - and what fits the specific needs of each individual. With future programs like 'Recommended Apps' based on demographics, usage and preference selection, platforms will be able to deliver a lot more value through their developer network directly to the user, because, of course, they have the data. They can offer a product they don't own to their users, with a direct benefit to them - a very unique concept and a true ecosystem at work. Maybe by recommending apps instead of ads, then advertising in the apps, they'll see a more effective model for monetization. You get a specific usage scenario, a more specific set of profiles, and a user who's doing something, not just socializing. Users would feel more catered to and have a better experience wherever they are. (Platforms: leverage these apps to gain the hearts and clicks of your users.)
Investors
The venture capital community is already transforming to respond to the new world of mini-apps . It's faster and much much cheaper to develop an app when you don't need to develop the platform, the user database, or do the same amount of marketing to find users. VC's continue to raise large funds, and it seems they need to seek later-stage investments to put the 'right' amount of money to work. Small apps aren't home runs, and they aren't going to use enough capital with a $100 - $350k launch range. Just enough to keep a developer or three happy for a year. Again, the 'App Studio' concept with an aggregation of apps, "ownership" of the user, and marketing of a product portfolio makes a lot of sense - the scale of such an operation fits more inline with a $2-5M 'A' investment. There will be 3 trends: a) existing VC's will continue to only invest in game-changing platforms b) mini-funds will form, with much lower investment parameters c) VC's will see the App Studio concept as a viable option.
An App Studio acts like a proxy for the VC to diversify and invest in multiple apps. It makes betting on any one app a risk, but with the main focus being operational expertise and distribution, the risk is much less. We'll probably see a few VC leaders start (if you've seen any, please comment!) and the rest will follow soon after like sheep and saturate the market...
Applications that reside within networks (social or mobile or both) are the new Chinese menu model of the internet - use what you want, where you want it, wherever you are. This is the intention of Facebook and the concept of the social utility - it's actually becoming a platform and a new operating system. Mini-apps are going to be here for a while - this is just the beginning.
Tom Kuhr
Tom has opinions.
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