Technology Research April 2011 Wireless Technology Q1’11 Mobile Developer Survey William V. Power, CFA Steven J. Beckert [email protected] [email protected] 214.361.1129 414.298.7850 Andrew T. Flis [email protected] 414.298.6179 1 Key Points • RIM developers open to switching to Android. 75% of RIM developers stated they would shift some or all of their work to Android if that platform was adopted by RIM (survey closed pre-RIM announcement). We are concerned that RIM may be incenting its developer base to work on a different platform, which could hurt QNX in the long run. Additionally, BlackBerry OS and QNX ranked low in ease of development and long-term outlook, though both ranked near the top in revenue generation. • Increased interest in WP7 after Nokia announcement. 66% of developers responded that they were probably or definitely more likely to develop for WP7 now that Nokia has adopted the platform. Symbian and Meego scored poorly in ease of development and long-term outlook. WP7 held its own in several categories, ranking well in ease of use and visibility, though has room to improve in revenue generation. • Android fragmentation still a significant issue, though well known. 55% of Android developers cited this as a significant issue, with many increasingly concerned about multiple Android app stores. Despite that, developers viewed long-term prospects as bright. • Apple/Android remain dominate. Though not a significant surprise, developers continue to rank iOS and Android well above competing platforms in many areas. • A few stats: 1) App. visibility – 39% of iOS developers cited high visibility, followed by 26% for RIM. Android trailed by a wide margin in this category at just 15%. 2) Ease of development. iOS and Android led, followed by Microsoft and Flash/AIR. 3) Ability to make money – iOS again dominant, followed by RIM, 4) Long-term outlook – Over 60% of respondents listed Apple and Android as having an “excellent” long-term outlook with less than 10% for each of the other platforms. • Stock implications: • AAPL - No change in outlook - Apple continues to dominate in most categories, which seems to support our Outperform thesis. • HTC (TW:2498) - Incrementally positive - Growing developer interest in WP7 via Nokia decision should also benefit HTC. Additionally, the release of Android 3.0 honeycomb may drive increased developer interest to Android tablets. • NOK - Incrementally positive - Per earlier comments, Symbian developer interest in WP7 should benefit NOK. • RIMM - Mixed to negative - While RIM still scores well on app visibility and ability to get paid, its long-term outlook remains poor, and we believe the decision to enable Android apps could backfire by reducing developer interest in its core QNX platform. Wireless Technology 2 Survey Background • Participants. We contacted roughly 2,000 mobile app developers and received roughly 250 complete or semi-complete responses. • Geography. 51% of our participants were located in North America, with 35% in Europe, 9% in the Asia Pacific region, 2% in South America, 2% in the Middle East and 1% in Africa. • App categories. “Games” was our most popular developer segment, roughly consistent with the broader app ecosystem, followed by productivity and tools classifications. Geographic Dispersion Developers by Category South America Africa Middle East 2% 1% 25% 2% 23% 20% Asia 14% 14% Pacific 15% 10% 10% 7% 7% 7% 5% 5% 4% 5% 5% 4% North America 2% 2% 51% Europe 0% 35% Source: Baird Survey Data Wireless Technology 3 Survey Background • iOS/Android overlap. 71% of the respondents develop for Android, followed by 62% for iOS. 70% of the iOS developers also develop for Android, with 63% of Android developers also developing for iOS. 71% of respondents develop for at least one other platform. 41% develop for 3+ platforms. 27% develop for 4+ platforms. • Tablets. 72% of respondents are currently developing for tablet platforms, but only 23% of tablet developers are developing for more than one platform, which is similar to our Q4’10 survey results. Of note, iOS currently commands a dominant share of tablet developer activity. Developer Sample by Smartphone OS Developer Sample by Tablet OS 60% 80% 71% 70% 62% iOS, 49% 50% 60% 50% Android, 38% 40% 40% 29% 27% Don't currently 30% 23% 26% develop for 20% 9% 30% tablets, but 8% 4% 8% 10% considering it, 0% 19% BlackBerry QNX 20% No Plans to (PlayBook OS), develop for 10% 10% Windows tablets at this time, 4% Phone 7, 4% Other, 3% webOS, 1% 0% Source: Baird Survey Data Wireless Technology 4 Platforms: Difficulty to Develop For • iOS, Android, Windows Phone 7 continue to receive high marks for ease to develop on. Developers generally reported that iOS, Android, and Windows Phone 7 were relatively easy to develop for. Windows scored slightly less well than it did in Q4’10, though continued strength is a good sign for the long term success of the ecosystem. • Symbian difficult for developers. Symbian took the mantle of the most difficult platform to develop for from BlackBerry QNX, so probably a good thing Nokia is moving to WP7. 21% still list QNX as difficult to develop for, though that is better than the last survey’s 62%. How difficult are these platforms to develop for? Q4‘10 Q1‘11 Android Android 2.0‐3.0 iOS iOS BlackBerry BlackBerry BlackBerry QNX BlackBerry QNX Windows Phone 7 Windows Phone 7 webOS webOS Symbian Symbian 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 1 (Easy) 2 3 4 5 (Difficult) 1 (Easy) 2 3 4 5 (Difficult) Source: Baird Survey Data Wireless Technology 5 App Store Visibility • Apple, RIM: most visible platforms. Apple and RIM received the highest scores for app store visibility again this quarter. RIM’s high visibility scores may be in part because of its relatively large user base but small app ecosystem. • Android continues to struggle. Developers in this quarter and in Q4’10 were concerned with the level of “junk” apps in Android’s ecosystem. This seems to be less of problem for Android 3.0 developers, which may be a result of the recent launch of the Honeycomb platform. How visible are your apps in these respective app stores? Android 2.0‐3.0 iOS BlackBerry BlackBerry QNX Windows Phone 7 webOS Symbian MeeGo 0% 20% 40% 60% 80% 100% 1 (Very Visible) 2 3 4 5 (Not Very Visible) Source: Baird Survey Data Wireless Technology 6 Best Revenue Opportunity for Paid Apps • Apple still reigns in revenue generation, others improve. iOS continues to be considered the operating system with the highest revenue opportunity for developers, with 74% of respondents ranking it a 1 or 2. That said, Android, BlackBerry and QNX all improved QoQ, with QNX improving the most dramatically. Developers mentioned that the demographic makeup of Apple’s subscribers made them more likely to spend money on an app, a statement we generally agree with. • Purchasing revenue offset by ads. The increase in Android revenue may be in part due to increased revenue from advertising. Multiple developers stated that ads were becoming a larger portion of total revenue for apps on the Android platform. Which mobile platform provides the best revenue opportunity? Q4‘10 Q1‘11 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1 (High Revenue Opportunity) 2 3 4 5 (Low Revenue Opportunity) 1 (High Revenue Opportunity) 2 3 4 5 (Low Revenue Opportunity) Source: Baird Survey Data Wireless Technology 7 Mobile Advertising Service • Google and Apple ad services – feedback improving. 45% our developer sample reported using advertising services from Google and Apple. However, profitability feedback on both was mixed. iAd improved quarter over quarter to be more profitable than Admob, and some developers noted that advertising is making up a more meaningful portion of total revenue. However, overall sentiment was that both services have room to improve from a profitability perspective. • Anecdotal feedback on BlackBerry Ad Service negative. Anecdotally, BlackBerry Ad service users noted that the platform was not enormously profitable, much like competing products. • Other services. Other services used by developers include inMobi, Mobclix, Inneractive, Greystripe, Jumptap and Smaato Who do you use for mobile advertising? How profitable has your ad service been for you? Don't Use Advertising Google/AdMob Google/Admob 30% 31% 28% 41% Q4'10 Q1'11 iAd/Quattro Wireless 22% 9% Millennial Media Other iAd/Quattro 11% Wireless 15% BlackBerry 0% 20% 40% 60% 80% 100% Adservice Millennial Media 1 (Very Profitable) 2 3 4 5 (Not Very Profitable) 4% 9% Note: In Q4’10 we did not request data on BlackBerry Ad Service or Millennial Media, those companies would have been accounted for in the other category. Source: Baird Survey Data Wireless Technology 8 Android Fragmentation • It’s a problem, not improving. 56% of Android developers said that OS fragmentation is a meaningful or huge problem. Worse still, the percentage increased from our Q4 survey. Three months is clearly a limited timeframe, but this would be a negative trend if it were to continue. • Store fragmentation also a concern. Several developers also expressed concern over app store fragmentation. Generally, developers seem to prefer a unified, single store experience like Apple’s App Store. • Negative for Android ecosystem, though well known. We view this feedback as directionally negative for the Android ecosystem and its handset partners, though we would note that this risk is well known by the market and developers view Android’s long-term prospects as bright. Do you view Android Fragmentation as a Problem? Q4‘10 Q1‘11 Not a Not a Problem, 14% Problem 11% Major Problem 23% Somewhat of a Huge Problem, 24% Somewhat of a Problem Problem, 13% 16% Meaningful A Problem, 17% Meaningful A Problem Problem, 33% Problem 20% 30% Source: Baird Survey Data Wireless Technology 9 Nokia and WP7 • Symbian developers show increased interest in WP7.