Why is Mobile Innovation so difficult?

Let’s be honest, the jury is still out on the money making capability of apps and mobile websites. Just the fact that one can do something does not generally mean it’s the right thing to do. I recently saw pretty depressing statistics as to how many apps have never been downloaded and its quite distressing reading. Yes we have our success case and they are generally brilliant but as a rule, successful paid apps are statistically speaking few and far between. We can speculate like the people who invested in Facebook that the product is going to be huge and we just have to be patient and take the bitter pill with a stock price that imploded, or we can look closer as to what apps are successful and what might be the path to success. Which sectors have been the most successful in turning a mobile strategy into a revenue success?

For example, Urban Airship (www.urbanairship.com) has been hugely successful with their mobile products supplying their customers with a host of innovative solutions such as in-app purchasing, push notification etc. They also boast an impressive roster of customers from Sega, Fox to SAP.

But I honestly doubt that their customers are generating that much revenue from the solutions.

Most of the companies who use these spectacular tools see mobile as a hygiene product to supplement their core products. They also map their app from what they are prepared to sell/supply rather than from what the consumer wants needs or have the ability to find for free.

One industry that is failing in the mobile industry despite the all the talk to the contrary is the media industry. The rot started to set in during the Halcyon Days of the web. The lessons weren’t really learnt then and the old regard of seeing the web as a digital newspaper stand is still very much in evidence and the related business models. In 2009 I wrote a blog post called the publishing industry and its OCP, and in the article I suggested that the only thing that will save the media industry is radical innovation because the challenge that they face is totally out of their context. One of the responses that I received was that the publishing industry knows this. Three years down the line, and I have not noticed much difference. Some swallows, yes. But still no summer.

Here in Stockholm one company is doing something that I admire all though I have no idea about how successful they are. But TocaBoca @tocabocastarted and run by mates of mine @bjornjeffery and @eovemar refuse to call themselves app developers, but rather Digital Toy Makers. This makes sense. They have quantified the value of their product (they make children friendly apps) and that’s what their customers buy in Appstore. They don’t get paid for using Apple as a digital distribution channel.

Old Media generally generated their revenue from their distribution strength rather than the quality of their content. The former has been negated so the latter is all that’s left and you have to ask yourself is there enough value in the product to sustain these big organizations?

So which mobile services and apps are making money? And by that I mean clear above the black revenue. Benjamins in the bank. I have Googled quite deep and the pickings of published results for organizations selling digital products are very few and far between and generally not that stellar. However, there are major success stories as well. And here is a trend that I noticed very strongly. Companies whose mobile strategies work in conjunction with their offline products seem to have a staggering success.

Apps and Services that give a clear and tangible benefit offline tend to rock the boat and in most cases these apps are free but they activate services in the mother company’s other sectors.

I am not at liberty to say which company it is, but one of Europe’s leading clothing retailers will never give up their printed catalogues as 70% of their sales made in the connected environment (mobile and stationary) are generated in by the dead tree media.

There is business to be made in the mobile sector. But we at ITG Believe that maybe the medium should not be the message but rather just the medium.