Application developer alliance: The app economy has a new catalyst

I have been watching the evolution of the Application developer alliance with interest. Late last week, I had a chance to speak to Jon Potter – President of the Application developer alliance.  On first impressions, there are existing ‘network of networks’ in the app developer space

However, the application developer alliance addresses some key gaps in the market which I illustrate here.

  • A ‘network of network’ creates network effects for the ecosystem. This is needed because the App economy is now a global ecosystem with benefits for grassroots developers.
  • The policy emphasis makes it very interesting. There are two facets to Policy. Firstly, policy makers often do not realise the significance of the App economy because it is so new. Secondly, because the App economy is a global industry – developers are affected by many regulations – especially around the domains of Privacy, Intellectual Property, Broadband Spectrum, Cyber Security and Mobile Payments . The app developer alliance is working with these issues which help the ecosystem. Hence, they are on my radar through both OpenGardens blog and the Policy bloggers network
  • Developers are small entrepreneurs and they have some common issues (globally), The apps alliance seeks to provide services which cater for such needs.

Why is all this significant?

The “App Economy” refers to economics and the value chain of mobile apps where developers create applications and distribute them digitally to a broad/global audience. The term was first mentioned by Business week in Nov 2009. It differs from previous software initiatives since it combines a technology platform and a marketplace. A set of core companies form the foundation of the app economy creating a set of interlocking ecosystems (ex Apple, Google, Facebook and even some Telecom operators with large developer programs like Bluevia/Telefonica).

The combination of technology, innovation, empowering grassroots innovation and a marketplace are at the heart of its economic value and job creating potential

See a recent report which indicates that the US could drag itself out of the current job crisis (and in the EU – that’s even worse!) through the App economy (pdf)

Some highlights from the report:

  • Nothing illustrates the job-creating power of innovation better than the App Economy.On an economic level, each app        represents jobs – for programmers, for user interface designers, for marketers, for managers, for support staff. But how      many? The report estimates roughly 466,000 jobs in the United States, up from zero in 2007 when the iPhone was introduced.
  • The biggest job creators include Zynga, a San Francisco-based maker of Facebook game apps that went public in December 2011, Facebook, Electronic Arts, Amazon, and AT&T, Google and Apple.
  • Despite being only four years old, the App Economy is still growing at a rapid pace despite the recession
  • By one estimate, the App Economy generated almost $20 billion in revenue in 2011.6 This includes app downloads, in-app revenues, sales of virtual goods, and sales of physical goods and services.
  • A related study (also referenced in the report) of app-related jobs focused only on Facebook. Three academics estimated the number of jobs created by Facebook apps using data on number of downloads and number of developers.They estimated that “the number of employees employed by third party developers [of Facebook apps] to be 53,434.” Then they calculated a range of spillover effects into the national economy, leading them to conclude that “a conservative estimate of the employment impact of developers building apps on the Facebook Platform in the United States in 2011 is 182,744 full time jobs.”
  •  There is a geographical disparity. App Economy jobs are spread around the country with  23.8 per cent in California, 14.8 per cent in the San Francisco Bay Area and 6.9 per cent in New York.
  •  The growth in the App Economy has followed the classic S-shape with a slight dip in early 2009, reflecting the deep overall recession followed by a dramatic acceleration in 2009, 2010 and early 2011

Hence, I believe that initiatives like the Application developer alliance is significant to the App Economy because

a)     For the first time, small developers can sell globally.

b)    The App Economy fosters grassroots innovation and

c)     The App Economy creates a service layer for the Internet

Images below from the app economy jobs study  You can also join the Application developer alliance for free at Application developer alliance