How platforms shape participation in the app economy Bryan Pon Caribou Digital AAG: March 23, 2015 Rise of smartphones Now: 2 billion handsets > PCs 2020: 6 billion connections, 80% in developing world (GSMA) Caribou Digital 2 Opportunity? Completely digital Production can be anywhere Lower barriers to entry Unprecedented distribution Caribou Digital 3 = ? Software platforms Ecosystems of interdependent firms (Cusumano, Gawer) Network effects and winner take all (Katz and Shapiro) Two-sided markets (Rochet and Tirole) Developers End-users Caribou Digital 4 App stores Virtual marketplace for each platform Disintermediates value chain Platform takes 30% of revenue National level stores, but global reach Caribou Digital 5 Data 10 markets iOS + Android Top 500 “grossing” Top 100 “downloaded” Manual search to find headquarters United States 1. Candy Crush 2. Facebook 3. What’s App 4. Hay Day China 1. 淘宝 2. Tencent 3. 360手机卫士 4. WeChat 12,000 apps 5,277 unique apps 2,988 unique devs France 1. Hay Day 2. Messenger 3. Boom Beach 4. Farm Heroes Caribou Digital 6 2,688 devs with location Top developers Caribou Digital 7 U.S. and East Asia dominate Rank iOS Android 1 United States 356 United States 287 2 China 308 China 248 3 Japan 197 South Korea 205 4 South Korea 190 Japan 192 5 United Kingdom 128 United Kingdom 89 6 Germany 99 Russia 86 7 Russia 91 Germany 84 8 France 88 France 66 9 Canada 44 Australia 34 10 Australia 34 Canada 32 n = 2,688 Caribou Digital 8 Agglomeration at city level Rank 1 2 3 4 5 6 7 8 9 10 City Seoul Beijing Tokyo SF Bay Area Shanghai Moscow London Paris New York Shenzhen Country South Korea China Japan United States China Russia United Kingdom France United States China n = 2,688 Caribou Digital 9 Developers 318 252 250 162 88 81 78 69 51 49 37% Top developers 2 from Africa 3 from Brazil 19 from India Exclusion at the state level China bans Google services from mainland Google merchant accounts unavailable in 90 countries e.g., Bangladesh, Guatemala, Cambodia, SSAfrica “…favorable market conditions, support from the developer community, regulatory considerations, etc.” - Joshua Cruz, Google PR Caribou Digital 11 App store structure Caribou Digital 12 Preliminary takeaways • Digital production of apps is concentrated in U.S. and major cities of East Asia, very little in Global South • Platform owner (or government) determines inclusion/exclusion at state scale • National app stores aren’t mitigating national reflexivity and winner-take-all global market Caribou Digital 13 Thank you [email protected] Caribou Digital 14
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