In its second-largest acquisition, Amazon buys the company for $970 million.
Retailers accept complexity as the price of cool, serving consumers the mobile apps they crave.
E-retailer Wine.com launched a mobile app right before Christmas that lets its customers save favorite wines in virtual cellars, create shopping lists, and view winemaker notes and label images. More than 100,000 consumers have downloaded the app, which is good for extending the Wine.com brand, says Amy Kennedy, vice president of marketing. But the success poses the question of improving the app, for instance, making it easier for consumers to use it to make purchases through their smartphones.
And, because the app only works on Apple Inc.’s iPhone and iPod Touch, an iPhone-like device that doesn’t handle phone calls, the e-retailer is faced with creating apps that can work on other sophisticated mobile phones. While the iPhone accounts for about a quarter of smartphones in the hands of U.S. consumers, 42% are BlackBerrys from Research in Motion. And phones using the Google Inc.-based Android operating system are gaining steam, accounting for 9% of U.S. smartphones at the end of February, up from only 3.8% at the end of November, says mobile and Internet tracking company comScore Inc.
“When we started working on this app, Android wasn’t even on the table,” Kennedy says. “The iPhone was the clear leader.”
The rapidly changing array of smartphones in the market is just one of the challenges facing retailers anxious to reach consumers through the mobile apps millions are using. Apps can cost anywhere from $10,000 to $50,000 to develop and an app for one type of phone must be significantly reworked to run on another. Because apps are popular, technology providers are developing tools to ease the pain of creating apps for many phones, but those tools are a work in progress.
The complexity, and for some the expense, might tempt retailers to walk away from mobile apps, except consumers love them—there are 185,000 apps for the iPhone alone, and there have been 4 billion downloads, Apple says. Smartphone owners are using apps to play games, get the latest news and weather, stay in touch with friends, even occasionally to organize their work, such as by color-coding incoming e-mail.
It’s hard to ignore the 45 million relatively affluent consumers who owned smartphones in February, up 21% from just three months earlier. And then there’s a retailer’s image to consider, which factored into Art.com’s decision to develop an iPhone app. “We wanted to leverage the cool factor of the iPhone,” says Roberto Mameli, the retailer’s vice president of technology. “We want to be a cool company.”
Apps are cool because they can deliver a richer experience than a mobile Internet site can, because the software that drives the app and much of the data can reside on the phone. That means the user does not have to go through web servers to access data that doesn’t change often, for instance Wine.com’s reviews of popular vintages. Plus, an app can make use of features on the phone, such as using the address book to easily forward a wine review to a friend.
But retailers have been relatively slow to embrace apps. As of last month, Internet Retailer counted 63 retailers with apps, most of which let consumers make purchases, versus 134 with mobile commerce sites. A mobile site offers the advantage of being accessible from any Internet-enabled phone, whereas an app works only on one type of handset, such as an iPhone or BlackBerry.
The reason why apps don’t work on every phone is that there is no mobile equivalent to Microsoft Windows to make it easy to develop software programs that will work on many smartphones. A piece of software written for Windows will run on any Windows PC, whether manufactured by Dell, Hewlett-Packard or any other company, and roughly 90% of the PCs in the U.S. use Windows as their operating system.
Variations on a theme
But the smartphone market is much more fragmented, with Symbian, Microsoft and other operating systems also in the race along with the iPhone, Blackberry and Android software. What’s more, there are variations in how an app will run from one device to another with the same operating system, because there are much wider differences in the hardware features of mobile phones than of PCs, says Faraz Syed, CEO and co-founder of DeviceAnywhere, which provides mobile app testing services.
“If it is the same operating system, but the hardware, features and components of two smartphones are different, then some code portability is possible, but not completely,” Syed says. “For example, one Android phone may have stereo speakers and another may not, which means that the developer’s apps, while mostly portable, may have to be adapted to play appropriately on the two phones.”
In addition, while the Internet works on global standards, mobile programs are funneled through networks owned by hundreds of wireless carriers around the world, each with its own technology. “If the app needs to work on multiple carriers, say AT&T in the U.S. and Vodafone in the U.K., then the app’s behavior can vary greatly,” Syed says.
DeviceAnywhere sells packages that include testing over a global network of some 2,000 handsets that operate via more than 30 mobile network operators. Retailers and developers can run test scripts over the phones and receive screenshots of what is appearing on smartphones.
Step by step
Despite the complexity, retailers can get into the app game. It just takes time, money and, often, some outside expertise, as Wine.com’s experience illustrates.
The online retailer’s first app was developed for the Symbian platform, a mobile operating system now owned by handset maker Nokia. While the basis of 200 million smartphones globally, Symbian is not a big player yet in the U.S. market. But Symbian subsidized the development of the app, a project that cost at least $10,000, says Zachary Berke, founder and CEO of mobile technology provider Exygy, which has worked with Wine.com on its mobile initiatives.