All About Apps Revisited (Part 4: App Development)

There were more than half a million app developers in 2010. Their number will rise 28 percent by 2020, a decade later, placing them in the 72nd place in term of growth among 749 occupations tracked by the United States Bureau of Labor Statistics. For comparison, there were almost 392,000 system software developers whose rank will expand 32 percent during the decade and 363,000 computer programmers whose number will increase by 12 percent. Among the occupations with higher growth, very few have a large base to begin with (e.g., the number of personal care aides will increase 71percent from a base of 861,000 in 2010); most have a relatively small base (e.g., the number of bioengineers will rise 68 percent but from a base of only 16,000) (NY Times 11/16/2012).

Developers

Who are the app developers? What drive them to develop apps? How well are they at making a living?

Profile

There are some common myths about app developers. One is that they are typically high school and college students developing apps on the side. There are relatively few barriers to entry into the app development business. So another myth is that developers come from all over the world, who are driven by their desire for a quick rise to fame and fortune. While there are some truth to these myths, a report by GigaOM Pro (Craven 2012) gives a clearer picture of reality.

  • Demographics. By age, there are many developers still in their teen or early 20’s but they are in the minority. They account for only slightly over 20 percent of the developer population. Nearly 60 percent of app developers are 30 years of age or older. So, the median age of app developers is 33. Developers tend to be younger in Asia-Pacific (averaging 29 years old) and older in North America (35 years) and Western Europe (34 years). By education, over 70 percent of app developers already have a college degree. Nearly half of those (or one third of the total app developer population) have graduate school education or degree. By gender, app developers are predominantly male; in the Asia-Pacific region, the population of female developers is virtually non-existent.
  • Geographical location. There are relatively few barriers to entry. The key challenge is being able to spot an unfilled need and to come up with an app idea on how to fill that need. It is not surprising that app developers tend to concentrate where app usage is high: North America (54 percent), Western Europe (21 percent) and Asia-Pacific (14 percent). Few developers come from the other parts of the world.
  • Employment. There are three types of developers: (1) amateurs, (2) professionals and (3) career developers. Amateurs pursue app development on the side, most likely on a part-time basis, for fun or for extra income. Professional and career developers are full-time developers. They make up a majority (60 percent) of the app developer population. Of those, 65 percent have their job focused solely on app development (career developers); 35 percent get involved in app development as a part of their full-time job for which app development skills are necessary for career advancement but not the main career focus (professional developers). Developers in both groups are highly experienced: nearly 30 percent of them have been developing apps for over four years; to put this in perspective, the app development craze began only five years ago when Apple opened it App Store.
  • Work setting. A very sizable minority (40 percent) of app developers work solo. The rest work in team in business firms. Many of these firms have two or three developers each; they employ 27 percent of the app developer population. Few firms have ten or more developers; they employ 19 percent of developers. A majority of developers work on one or two app projects at a time, few on four or more projects.

Economic Status

Until very recently the mobile app market looked like a duopoly between Apple iOS and Google Android platforms, which attracted the large majority of developers (61 and 68 percent, respectively, in mid-2012). There is now an expanding third platform: HTML5 (with 50 percent of developers, compared to 56 percent for iOS and 72 percent for Android, in mid-2013). Other platforms (e.g., Windows Phone, BlackBerry, Symbian and Bada) lag far behind (Vision Mobile 2013). How much developers can earn from app development depends on several factors.

  • Developing apps for multiple platforms makes economic sense, up to a point. Multi-platform developers generally earn more, e.g., $2,155 per app-month for those serving four platforms, compared to $1,017 for two platforms and only $653 on one. Taking into account the multi-homing cost (of porting an app from one platform to another), dual-platform development (mostly Android and iOS) is the most popular option, attracting 27 percent of developers, compared to 22 percent of single-platform developers. Beyond this point, multi-homing begins to lose its popularity: 26 percent of developers work on three platforms, 13 percent on four and 7 percent on five.
  • Being “career developers” pays well. About 18 percent of developers do not intend to make money from their app development activities. For the remaining 82 percent who are in it for money, a majority (67 percent) do not make enough to sustain themselves or their business. They fall under the “app poverty line” of $500 per app, per month. This is true even on the leading platforms, e.g., 55 percent on iOS and 54 percent on Android. Keep in mind that each developer has on the average 6.2 apps on Android platform and 4.8 apps on iOS, according to the App Genome Report (Lookout Mobile Security, 2013). So even those earning less than $500 per app-month may actually earn several times as much. Their earning looks even better considering many of them are part-time developers building apps on the side (as “amateurs”). The economic picture for app developers may not be as bleak in reality as it looks initially. Findings from GigaOM Pro (Cravens, 2012) show one in three app developers are part-time developers and only 65 percent of the remaining developers, or slightly less than 40 percent of all developers, are “career developers” focusing solely on app development. It comes to no surprise that a slight majority of app developers earn less than $15,000 a year. This figure skews downward the average annual earning of app developers to about $45,000. If those making $15,000 or less are excluded, the average annual earnings for the rest (presumably full-time developers only) jumps to $75,000.

Apps_Developers_MorePlatformsHigerRevenues

  • Learning about the market is key to higher earnings. Nearly half of developers build apps based on their own needs and one in three based on discussions with friends. These developers make the least money, $779 and $1021 per app-month, respectively. Fewer developers build apps based on market research (18 percent), discussions with users (24 percent) or monitoring app stores (24 percent). Those doing so make much more money, between $1,685 and $1,883 per app-month. Clearly, it pays to conduct market research, get user feedbacks and monitor market trends.
  • App development is a business. Developers building more apps per year tend to make decisions based on different criteria than those publishing only a few apps per year. The former developers are often commissioned to build branded apps or work for large app builders. They have to work closely with clients and management to conduct market research, perform data analysis and build defendable business cases. They benefit from such rigorous business practices.
  • Extending successful apps to new markets pays the most. Developers who make the most money are those extending their apps into other markets, either to other countries ($1,952 per app-month) or other industries ($2,957 per app-month). There are relatively few of these developers (7 and 13 percent, respectively). Obviously, these two approaches only work for developers having already built tried-and-proven apps.

Development Process

Timeline

App development is a business undertaking. It has to address business issues and considerations as much as technical ones. It requires a whole lot more than just coding the app. Figure ? below summarizes the major steps that comes before and after (technical) development.

Apps_DevelopmentProcess_5Ds

  • Define. This first step involves (a) articulating the user need for the app under consideration, (b) making a business case for it, (c) selecting a mobile platform for app development, (d) setting deadlines for deliverables, (e) allocating budget, and (f) assigning project management responsibilities.
  • Design. This step, more than any other steps, shapes how consumers will eventually experience the app in use. It (a) specifies the core functionality the app will provide, (b) sets its look and feel, (c) maps how the app flows, and (d) set forth key technical requirements.
  • Develop. This step is where “the rubber meets the road”. It involves the coding (a) to turn technical specifications into a functioning app and (b) to incorporate add-on features (e.g., in-app purchasing, game center or social sharing).
  • Debug. This step ascertains that the app will work as intended. It (a) tests and improves functional usability, (b) corrects technical issues, and (c) detects and closes potential security holes.
  • Delivery. No app is done until it is submitted to and approved by the intended app store. This step brings the app to the launch point where marketing and promotion ensures its wide acceptance.

How long does it take to complete this development process? That will depend on the type of app being developed. A simple app having only 3 to 5 screens with simple flows between them, using offline data and offering no server-side interactions may take 2 to 4 weeks to develop. Adding list-based or organized static data that requires server-side interactions makes the app moderately complex and hence lengthen development time to 4 to 8 weeks. Building a complex app that needs heavy server-side interactions to display dynamic data and provides social media capabilities can easily takes 8 to 12 weeks. Developing an enterprise-class app that replicates enterprise business processes and supports system integration (e.g., product catalog with real-time inventory status, shopping cart, payment processing, order tracking and customer reviews and ratings) requires much more time, 12 to20 weeks or even longer. In general, graphic-intensive design, complex logic controlling the flow between app screens, and integration with backend server or third-party system take more time for conceptualization, execution, testing and debugging. Platform fragmentation (e.g., the large number of screen sizes and resolutions among Android devices) can increase complexity and thus stretch out development time.

Apps_Development_HowLong

Cost Elements

While all apps may go through a similar development process, they come out in all shapes and sizes. Each app differs from other apps with respect to design features (e.g., basic vs. complex interactions), aesthetics (e.g., simple 2-D vs. high-definition 3-D graphic), functionality (e.g., entertainment- vs. utility-oriented), integration (e.g., with back-end databases or other apps, or without), sharing (e.g., with vs. without connections with other users through social media), and so forth. There is therefore no such a thing as a typical mobile app and hence no such a thing as the typical cost of developing a mobile app. Instead, app development cost may fall somewhere in a very wide range from a few thousand to several hundred thousand dollars; and that is just for a single platform. There are also business owners with app development skills who build their own apps with “sweat” equity and no cash outlay other than the registration fee with a leading platform for the necessary software development kit (SDK) and the right to distribute apps through its app store. Google Play requires a one-time registration fee of $25 while Apple App Store requires an annual membership fee of $99.

One cost variable is the wage rates of app developers. They vary very widely depending on the skills, experience, reputation, location and professional affiliation (freelancers vs. career developers employed by established development firms) of individual developers. A sample from the directory of app development firms on Sourcing Line shows the minimum hourly rate can be as low as $20 or less and as high as $200 or even higher. The rates for developers in emerging economies (e.g., Bulgaria, India, Peru and Vietnam) are generally much lower than those for developers in developed economies (e.g., Australia, Canada, France, USA and UK).

Apps_Developers_HourlyRates

The total development cost will depend on the hours it takes to develop an app, not on the hourly wage rate alone. A relatively simple app without access to back-end systems or unique hardware features (e.g., camera and contacts) may take an equivalent of 2-5 days of work for one or two developers, for a cost of $3K-$8K. A more complex app with access to database and social connectivity may cost a great deal more, $50K-$150K. The Barack Obama app reportedly took 22 days to develop, using 500-1,000 hours at a rate of $100-$150 per hour, for a total of about $100K. Game apps, often using 3-D graphic and many hardware features (e.g., GPS, accelerometer, compass and gyroscope), can cost as much if not even more. Angry Birds was estimated to cost $125K-$180K (SocialCubix 05/28/2013).

Dissecting the development process can offer additional insights. Design work for a not-so-complex app should take one designer a week or two to complete; at about $100/hour, that design work would cost about $6K. To connect that app to a backend server may require another two weeks or so of time by a more experienced developer; at a higher hourly rate, that system integration feature may add $12K to the project. Coding then takes several weeks or a few months; even offshoring that to low-wage developers in an emerging economy still costs $10-$15K. Add-on features cost extra, e.g., in-app purchasing $1K-$3K, Game Center integration about $1K and social media sharing capability $1K-$2K. Someone will have to manage the app development project; even on apart-time basis, that may easily add $5K. Do not overlook other costs such as graphic design, testing and debugging, and unforeseen delays and issues. One can easily look at $35K-$40K for a not-so-complex, non-game app.

Business Insight: iEmotions and Twitterific

iEmotions is an iPhone app produced by Yord Apps. It claims to be able to identify the user’s emotions based on his/her choice of images. It uses proven psychological testing to determine what the user’s subconscious mind is trying to tell him/her through his/her feelings, e.g., having doubts about the choice of partner or being worried about making the wrong career decision. According to its producer, being graphic-intensive, the app required the work of several graphic designers, a 3-D modeling artist and animator and an art director besides the usual position of a project manager. That led to nearly $60K in designing the app, its graphics and unique look and feel. Afterward, technical development took 8 months at the cost of $45K plus some “extras” such as text content (written by professional psychologists and a sci-fi author for $5K), music and special effects ($1K). Testing and debugging led to extensive polishing works at the cost of $17K so as to employ an artist and a developer for an additional 6 weeks. On top of all these were $30K in project management and $50K in app marketing.

Apps_DevelopmentCosts_iEmotions

Twitterific, the popular twitter app for the iPhone, required about 1,100 hours just for coding alone, according to its developer. It was built solely with sweat equity so there was actually no major cash outlay. Had it been built with hired programmers at the hourly rates of $150, its coding alone would have amounted to $165K. On top of that, the design phase would have added $34K, project management, testing and other tasks $16K, and recoding the app for the iPad another $20K. Note that this app does not use any support from backend server, which would have added significantly to the development cost of $230K+ (PadGadget 2010).

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