The

Apps

Scorecard
OCTOBER 2010

How App Stores Are Driving Global Changes in the Media, Gaming and Consumer Electronics Industries

Report Introduction . . . . . . . . . . . . . . .2 Mobile Operating Systems . . . . . . . . .3 App Store News . . . . . . . . . . . . . . . . . .6 Notable Apps . . . . . . . . . . . . . . . . . . .19 Lies, Damn Lies & Statistics . . . . . .23

Mobile TV & Video Apps . . . . . . . . .31 App Store Controls & Security . . . . .35 Upcoming Devices . . . . . . . . . . . . . .38 Projections & Industry Opinions . . . .44 Conclusion . . . . . . . . . . . . . . . . . . . . .48

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Apps: Dawn of a Golden Age

In July 2008, the iPhones App Store opened for business with a handful of apps and limitless potential. By the end of April 2009, Apple said that more than one billion apps were downloaded from the store. That number rose to more than four billion by April 2010, and was said to be 6.5 billion September 2010. The sheer magnitude of Apples success comes into full view when realizing that the iPhone accounts for less than 1% of the installed base of mobiles, while getting more than 30% of all app downloads for mobiles worldwide. The market gets even more complicated when factoring in Apples competition, which largely comes in the form of: - Nokias Ovi Store in European and emerging markets for both smartphones and feature phones. - Googles Android Market and Android OS, which are becoming the most popular smartphone OS and storefront in both the US and Europe in terms of new users. - RIMs BlackBerry OS and AppWorld with a hold on corporate accounts. - Other players like Microsofts new Windows Phone 7 and its marketplace that are poised to gain ground. By 2012, analysts predict that there will be roughly 50 billion mobile app downloads and by 2013 there will be as many as one billion smartphone users. The mobile app market will be larger than the global CD market by 2013, using the most conservative estimate of a roughly $15 billion market. By 2015, the market is expected to reach $50 billion. There has never been a more important time to understand whats happening in the market and where the market may well lead with new operating systems emerging, large updates to existing systems being released, new devices with better hardware coming out every month and an untold number of new non-phone yet app-capable devices being developed and demonstrated.

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Mobile Operating Systems

Android (Google)
Android is Googles operating system for mobile devices including cell phones, tablets, netbooks and TV sets. The platform is based on Linux and GNU software. It was originally developed by Android Inc, which was later purchased by Google. After, it was broadened to the Open Handset Alliance. Android was unveiled in November 2007 along with the founding of the Open Handset Alliance, a group of 71 hardware, software and telecoms. Android is one of the fastest growing smartphone OS based on both the number of supporting devices and sales. It currently has more than 100,000 apps and is activating roughly 200,000 new smartphone users per day. It is the second most popular mobile app development environment. On July 12, 2010 Google announced the App Inventor for Android, a Web-based develop environment for novice programmers that allows easy integration of the systems more technically difficult features. The future of Android outside of the mobile space is uncertain. Google is currently developing a Chrome OS that will be based on its Chrome Web browser. It will be used in the upcoming Google TV offerings as well as future netbooks and laptops. Many tablets featuring Android are expected to reach the market by the end of the year, with releases of devices planned as far ahead as a 2012 model with 3G and 4G support. The Chrome OS is reportedly being pushed for these future devices as well, with Google releasing the software developers kit (SDK) for Chrome and a preliminary developers-only app store location for Chrome in late August, 2010.

Samsung announced bada in November, 2009, and received support shortly thereafter from Twitter, EA, Capcom, Gameloft, and Blockbuster because of its media focus. The first bada mobile, the Wave S8500, was first shown at the Mobile World Congress in February 2010. It featured roughly 50 apps when it was first demonstrated. In May 2010, Samsung released the bada SDK and started the bada Developer Challenge with total prizes of $2,700,000. The Wave S8500 was released on June 1, 2010 and sold one million handsets in four weeks. It opened the Samsung Apps store for the bada platform at the Waves launch. It currently features roughly 725 apps, about 70% of which are free.

BlackBerry OS (Research In Motion)

The BlackBerry OS is the proprietary mobile OS developed by Research In Motion for its BlackBerry line of smartphones. The system supports multitasking and specialized input devices such as the trackwheel, trackball and trackpad. The platform was built around and is best known for its native support of corporate email and the wireless synchronization of corporate data through the BlackBerry Enterprise Server. Third-party developers can write software using the available BlackBerry API. Certain apps and certain usages are covered by a specific set of guidelines, including digital signatures of both users and the app developers. This is aimed at protecting corporate information. The BlackBerry OS is one of the few where support of updated versions for each device depends on individual carriers. While RIM might release an update for all BlackBerry Bold models, for example, carriers decide when and if the new version will be released to their users. In April 2010, RIM announced that the BlackBerry OS 6.0 will be released in Q3 2010. It was leaked in early August before the US release of the BlackBerry Torch smartphone.

bada (Samsung)
bada is the mobile operating system developed by Samsung Electronics. It is for both smartphones and feature phones. Samsung says bada will completely replace its existing proprietary feature phone platform and be on the majority of coming Samsung smartphones.

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rumor, here are the latest pieces of news that will mark trends in the App Store:

iOS Updates Coming This Year

Two new versions of iOS 4 will be released by year end. The new 4.1, available in September, added some features to the iPhone and iPod touch like multitasking, Game Center for multiplayer games, high dynamic range (HDR) photos plus fixes bugs. Following by year-end will be 4.2 to update the iPad with functions such as multi-tasking and wireless printing. With the upgrade the iPhone 4 gets video chat. HDR automatically adjusts a photos resolution and contrast to produce the best results. When the camera is put in HDR mode, it takes three pictures and uses them to produce a best efforts photo. It also keeps the original photo in case the user prefers it.

However, PlayOns service will cost users too. After an initial 15-day free trial, users have one of two options to continue service: 1) a one-time fee of $79.99 for presumably lifetime access; or 2) $39.99 for the first year and then $19.99 for each additional year.

iOS Becomes a Control Pad

Developer Daniel Hellerman has been showing an app that will allow users to control Blizzards new and popular StarCraft 2 game. Its on pace to become the best-selling PC game of 2010 despite coming out in Q2 with somewhat limited supplies. The app not only directly controls a PC, but it controls software running on a PC and interacts between the two devices in real time. While the game may not appeal to all, this type of massive interaction between not only two devices but the platforms they are running will continue to develop for iOS as the new Apple TV is released and as operating systems make it into TVs and STBs.

PlayOn Turns to Safari over App Store

PlayOn is taking the road less traveled in the app world and actually doing what Steve Jobs suggested to developers before the App Store even popped up: make an app in Safari. For those iOS users that want Hulu and Netflix streamed to an iPhone or iPod Touch, they were able to turn to the HTML5-enabled PlayOn Web app that streams content from a connected computer running PlayOns software (however users can now get Netflix on the iPhone and iPod Touch thanks to an updated app from the movie service). The Web app works with Web video properties like Hulu and Netflix. It uses a browser to give a user access to all of the content normally available from these two companies. Going through Hulu to get service access on the iPad requires a $9.99 subscription and a private invite to its beta, but only roughly 20% of the content on Hulu is available only to these subscriberssome estimates put this as low as 12%.

Alternative iOS App Store Opens its Doors

OpenAppMkt, billed as an alternative to the native app store for iOS devices, has opened for business with a selection of HTML-based apps. It is one of the first large alternative storefronts for iOS devices that doesnt require a jailbroken device. Users must first install and run the OpenAppMkt client, but can choose from its list of free and paid apps. Like PlayOns recent app foray, the OpenAppMkt storefront is what Apple first envisioned for the iPhone back when Steve Jobs said the plan was for all third-party apps to be Web based. Due to its nature, OpenAppMkt is getting a lot of comparison to jailbroken app stores. All OpenAppMkt apps are HTML based, so its selection is much more limited than those for jailbroken iOS devices, but there is also a much larger audience of current and

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to access the app catalog and download all applications free of cost. Some users will experience data browsing charges during their access of roughly one penny per kb of data. Virgin said the new mobile store is available in 16 areas: Karnataka, Andhra Pradesh, Tamil Nadu & Chennai, Kerala, Orissa, Mumbai & Maharashtra, Kolkata & West Bengal, Haryana, Bihar, MP&CG, Punjab, UP (E) and UP (W). DiGi said that its customers can download apps on more than 2,000 handsets across all major platforms, including smartphones and non-smartphones. GetJar founder and CEO Ilja Laurs said the company has more than one billion downloads to date in more than 200 countries. The companys key point of difference is

its open market approach, which allows it to deliver applications for both feature phones and smartphones across all major platforms such as Android, BlackBerry, Windows Mobile, iPhone and Symbian, among others, Laurs said.

Dell Launches its Own App Store

Dells new mobile app store is called the Mobile Application Store which competes against iOS and Android stores. Dell is starting its store with PocketGear, providing apps for mobiles from Dell as well as those for BlackBerry OS, webOS, Symbian, Windows Phone 7 and Android mobiles. in June 2010 in the iOS App Store, Skypes 3G iPhone client was downloaded five million times. - Opera Mini: in June this mobile browser app was getting 59.4 million active users. By July it was serving 1 billion daily page views, up from only 100 million views in 2008. In its first two weeks in the iOS App Store, it was downloaded 2.6 million times. - eBay: its iOS app had been downloaded 11 million times by July 2010. The company said it will make $1.5 billion from mobile transactions in 2010, a 150% increase from 2009s mobile revenues.

The Smallest Needles in the Biggest Haystacks

Picking out a series of apps that have made it is a relatively easy task. Most app stores give users quick access to the top or most download free and paid apps, usually on the main page of the app stores interface.

Notable Apps:

Things get tricky when picking out the upcoming apps that will lead the way in downloads and revenues. Here are lists of the current app leaders, both free and paid, for the - Shazam: this app has been downloaded by more than 75 million users and has identified over 1 billion major stores, followed by apps that have reached significant milestones and a few apps that are introducing something new or are likely Top Applications: App Store for iPad (July 2010) to blaze a trail through the rankings. Paid Apps We rated highly existing best sellers. Rank App Name Publisher Category Price The user is the driving factor behind 1 Pages Apple Productivity $9.99 whats current in the mobile space, and 2 Modern Conflict HD Clickgamer Games $2.99 their voices matter the most. 3 Osmos for iPad Hemisphere Games Games $4.99 4 Angry Birds HD Chilingo Games $4.99 Apps with Significant 5 GoodReader Good.iWare Productivity $0.99 Milestones Free Apps 1 iBooks Apple Books With the proliferation of app stores, smartphones and networks strong 2 Real Solitaire Free for iPad EdgeRift Games enough to support downloads, mobile 3 WeatherStation Free Bigsool Weather apps have the potential to generate a lot 4 Hulu Plus Hulu Entertainment of money and traffic. Here are some of the most recent milestones for apps. 5 ABC News for iPad ABC Digital News - Skype: during its initial launch week Source: Published Rankings

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- By 2013, there will be as many as 1 billion smartphone users. - The most conservative revenue estimate is app stores peaking at $15 billion in 2013. - The broadcast revenue estimate predicts app stores reaching $17.5 billion by 2012. - By 2013, the app market will be larger than the CD market. - App stores overall have cut the average app time-tomarket by two thirds, now averaging 22 days. - App stores have cut time-to-payment cycles from, on average, 82 days down to 36 days. - Nielsen found that 11% of global consumers either own or plan to purchase a tablet PC by the end of 2010.

- The Android Market and GetJar have become the latest app platforms to surpass 1 billion app downloads. - GetJar says it delivers 3 million downloads per day. - The iPad counted 35 million app downloads in its first three months. - iOS users average 37 apps per device. - Android users average 22 apps per device. - BlackBerry users average 10 apps per device. - 50% of iPhone owners download at least one paid app per month. - US iOS device users average 60 app downloads per year.
Global Smartphone App Market: 2010 Entire 2009 First Half of 2010 App Market Revenues $1.7 billion $2.2 billion App Downloads 3.1 billion 3.9 billion Source: Research2guidance Nielsen: Mobile and Web Video Usage Indexes Mobile Video Rankings (Usage) Rank 1 2 3 4 5 Region Asia Pacific Africa, Middle East Latin America European Union North America Online Video Rankings (Usage) Rank 1 Region Africa, Middle East Latin America Asia Pacific North America European Union Index* 114 114 111 89 70 Index* 145 136 118 55 45

Downloads
- 3.8 billion apps were downloaded in the first half of 2010; in all of 2009 there were only 3.1 billion app downloads. - The iOS platform hit 5 billion downloads in June, 2010 and then 6.5 billion in September, 2010. - Android reached 1 billion downloads in July, 2010. - RIM says the BlackBerry App World averages 1 million downloads per day.

1 3 4 5

*Global average = 100; Number over/under 100 is % likelihood more/less to watch videos than the global average in the past 30 days. Source: Nielsen

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Android, on which Google has a much looser grip, will likely have the most trouble from this because of the availability of many untested apps and the lack of a true approval process. The issue will likely reach its apex as these app stores start reaching out to newer devices that havent crashed before. As Google opens its doors for an Android or Chrome app storefront for its coming Google TV STBs and TV sets, it could end up being a Pandoras Box. The first person to have their TV crash is going to be looking for someone to blame and avoid.

by both consumers and app developers. The old protection model led to apps unable to be downloaded by users whose phones had been rooted or were running a custom ROM instead of the specific OS provided by the manufacturer. The big problem here is that it meant some customers couldnt download and pay for apps they wanted while users who wanted pirated copies of apps could easily circumvent Androids protections. It was an odd mantra: if you want to pay, youre out of luck; if you want to pirate, go right ahead. The original authentication structure may change as developers get creative. Google is providing two preconfigured implementations but has said apps will be able to contact the licensing server in a variety of ways as developers think of, and implement, new ones. The preconfigured implementations will stop an app from running if the server doesnt verify its license. One will only allow the app to start if the server is available for verification while the other will also accept a cached response from the last time the app was run if theres no connection available.

DRM Shifts in the Android Market

Google has a licensing server to its Android Marketplace to enable apps to verify whether or not the user has purchased it before launching. In order to use the new service, an app must be sold through Googles Android Market store and be on a device running Android 1.5 or later, which limits the service somewhat to newer models but wont be an issue in the near future. Free apps cant use the authentication service. This would allow them to track other usage data instead of just purchases.

Spying Tools Hit Android Market

Unfortunately for Google, letting everyone play in their app market can have some problems. Recently, security experts issued some warnings over another set of applications that went up for sale on the Android Market because of the serious breach in data, privacy and billing information caused by these apps. Two of the main concerns are apps that send premium SMS messages to foreign numbers and some spy tools that gave away the geo-location of a mobile to other users. The premium SMS apps have done a variety of things from sending out a users phone number so they receive unwarranted messages to sending messages to premium numbers that not only charge the user extra for each message but also sent out their credit card and other billing information. When found out, these apps have been pulled, though some users are complaining that the information shared cannot be un-shared and that there is lasting harm both on the handset and their wallets.
I

Communication with the licensing server will be done exclusively by the Market app itself using RSA public-key encryption. The new licensing service is intended to replace the current DRM scheme, which has been heavily criticized

Global App Stores

App Store Name Owner/Parent Launch Date Potential Reach (Approx.)* Downloads Apps in Store Cellmania Cellmania July 1999 Clickgamer Chillingo July 2010 Crackberry Smartphone Experts Feb. 2007 Cydia Store Cydia Store March 2009 80 million (Achieved is 2 million) Undisclosed 57 djuzz djuzz Feb. 2010 Company says "320,000 users per day" 9 million 5637 Available in South Africa, India, US, Indonesia, Malaysia, Nigeria, UK Free

250 million 500 million most are paid 2 million

175 million

32 million

Undisclosed 4244

Undisclosed 12172

App Types (Restricted To)

No Restrictions

Games Only.

Only Works With No Restrictions JailBroken iOS Devices

Pricing Options

Free and Paid Mobile & PC App, Web Portal Credit Card, Carrier Billing All Android, iOS, RIM, Symbian, WinMo OS-Supported Smartphones

Free and Paid Yes, Also Web Portal PayPal, Credit Card Undisclosed iOS, WinMo, Palm, Symbian, RIM, Gp2X OS and FlashSupporting Mobiles

Free and Paid No: App or Web Portal Credit Card

Paid

On device portal Payment Methods Runtime Support

No: Web Portal

No: Web Portal Varies By Developer J2ME, MIDP, BlackBerry RIM, Android, WinMo, Symbian

PayPal, Amazon

Undisclosed

Objective C

OS support

BlackBerry OS

iOS

Device Support

All BlackBerry Models

iPhone, iPod Touch

OS-Supported Smartphones

Revenue Share (Dev. Keep) Promised Time to Market

70%

55% to 65%

Undisclosed

Undisclosed

100%

2 weeks

Undisclosed

Varies

Immediate

2 to 3 Days

*Based on published numbers and estimates

Rider Research 2010 www.riderresearch.com

Global App Stores

App Store Name Optus App Store Owner/Parent Launch Date Optus Nov. 2009 Orange Apps & Widgets Orange Dec. 2009 Palm App Catalog Palm Sept. 2009 Pdassi for Pdassi, envi.com KG April 2010 PlayNow Arena Sony Ericsson Aug. 2009 69 Markets; 25 million devices Undisclosed Undisclosed

Potential Reach Optus Australian Orange European Customers (Approx.)* Customers Downloads Apps in Store Undisclosed 3,000+ Undisclosed 200,000+

1.2 million

Undisclosed

10 million 5,000+

Undisclosed 8,700 No Restrictions: Five Stores Available Throughout Europe

App Types (Restricted To)

No Restrictions: Apps for No Restrictions Smartphones and No Restrictions Widgets for Feature Phones

No Restrictions

Pricing Options

Free and Paid Yes; Also Web Portal Carrier Billing

Free and Paid

Free and Paid Yes; Also Web Portal Credit Card

Free and Paid

Free and Paid Yes; Also Web Portal

On device portal Payment Methods Runtime Support

Yes Carrier Billing, Credit Card Java, SMS

No: Web Portal

Varies By Store Credit Card, SMS Java, Dalvik, Flash, XPERIA Sony Ericsson, WinMo, Symbian, Android Most Sony Ericsson Devices

Java, Flash, .NET

Mobile Web

All RIM, Android, iOS, webOS, Symbian, WinMo

OS support

Symbian, Android, RIM, Android, RIM, WinMo, Symbian WinMo Multiple Devices from 11 Manufacturers

Palm webOS

Device Support

All Devices

Palm Pre and Pixi

Approx. 300

Revenue Share (Dev. Keep) Promised Time to Market

Undisclosed

Varies by Store

70%

Varies By Store

70%

Undisclosed

Varies by Store

Undisclosed

Varies By Store

Varies By Platform

*Based on published numbers and estimates

Rider Research 2010 www.riderresearch.com