The release of educational platform is a strong move by Apple. Not only it’s a market that hasn’t seen any significant innovations for years. Getting young people hooked on the iOS platform early is a great way to ensure they’ll be willing to buy Apple stuff when they grow up. However, it might be a bit too soon for Apple to celebrate. I expect the same move by Amazon in a few months. Eventually they will ship a better tablet than their current Kindle Fire is, and with the clout they have among traditional publishers, they’ll be able to grab the lead in tablet-based educational market.
Amazon is becoming a super-monster company of the new age. Their cloud services were basically the first large-scale commercial cloud available, and it seemed to be a bit weird for them to move into it. These days, after their strong tablet debut, it won’t surprise me if Amazon releases a personal cloud platform (think gmail and Google Docs), a browser (take Chromium), a search engine (becoming a commodity too), ad platform (hello AdWord). This all can happen thanks to their deep penetration into consumer market and democratic (think cheap) pricing. Now this is a threat that Google might not survive.
I used to say that Catch (a note-taking application) repeats everything after Evernote, but turns out that’s not true anymore. First, I noticed that Catch under Android is much better than Catch for iPhone. Despite a recent update of Catch for iOS, it is still pretty basic. Nothing has changed much since I reviewed it in March 2011. It’s a totally different story for Android. Not only Catch for Android is better looking and has a bit more features. It comes in several flavors too!
In addition to the main Catch Notes application, the guys released I Journal and AK Notepad. These are simply downgraded and differently skinned clones of Catch. While this approach is nothing new, it is mostly used in the game space. For example, most of the Alawar’s games are re-skinned time management and 3-in-a-row games. It is quite innovative to see this in the productivity application genre. I’m quite interested in seeing more Catch offsprings and whether or not this strategy leads to more paying customers in the future.
App stores have been around for a while, and our company has been selling MobileNoter through all major ones: Apple Appstore, Google Android Market, and Amazon Android Market. We know a thing or two about app stores, and the most important thing we know is that they are totally unfriendly to the business software vendors. I will use “business software” in a loose sense here – basically, everything that is not entertainment and doesn’t cost a buck or two apiece is considered as a business software in this post.
1. App stores hide buyers from vendors. While staying anonymous is cool when one buys iFart app or perhaps another countless “3-in-a-row” clone, this is not the case for the business software. First and foremost, it is going to be harder to provide support to the customers. It is harder to identify whether they are your customers at all, what software they bought, what version they are using, and so on. It is also harder to do cross-selling and up-selling. You can’t send an email to the customers saying “You have our software for iPhone, we have a new version for iThing too”. What app stores should do: they should allow for opt-in email sharing by the customers. If a customer wants to share her email with the vendor, she should be able to just do that without any hassle.
2. App stores have terrible pricing structure. They don’t have discounts or coupons issued by the vendor, they don’t have volume discounts, they can’t sell upgrades to the applications, and they don’t allow packaging your goods and services, for example offering a premium support plan for extra money. All these things have been used by the business software vendors for a long time. One would wonder why major app stores can’t implement these things. The only thought that comes to mind is that they are only interested in selling entertainment stuff. What app stores should do: they should implement flexible pricing structures similar to those of Plimus and other eCommerce infrastructure providers.
3. App stores don’t let a free trial (with the exception for Google Android Market, where developers can use in-app purchases for that). Business software costs anything from $10 to 4-digit figures and few people are going to just cough up this kind of money without seeing what they are getting first. What app stores should do: pretty obvious.
4.The 30% cut is not justified. App stores shouldn’t be THAT greedy. It’s OK to take 30% off $0.99 purchases because the transaction costs are high and because the impulse buyers are the main drivers of sales. It is a totally different story for elaborate and expensive software. These apps require out-of-the-app-store marketing, because they are rarely going to be in the app store top lists and the app stores’ search capabilities are dismal. The 30% cut is a good deal when compared to the brick and mortar stores, when you sell software in a box with a disk and a printed manual, and it is sitting on a real shelf. Ain’t these times gone forever? What app stores should do: they should implement a straightforward structure where the cut is reduced the higher the price of the software is.
5. Lack of payment options. App stores only know the credit cards. The other 10 ways of paying are unknown for them. An enterprise buyer is likely to demand an invoice, to pay with a purchase order, and so on. Again, this is not going to be a problem for a cheap one-time-run app. What app stores should do: again, pretty obvious.
What the business software vendors should do: the only way currently available is to move your software into SaaS territory. If you claim that you provide a service, then you are free to sell it on your website, gather customers’ emails, provide flexible prices, offer a free trial and don’t give a leg and an arm to the greedy app stores. A lot of companies are doing this at the moment. However, it would be more convenient for the users if the vendors didn’t force them to their websites. Sometimes the app is not very suitable for the SaaS model, and strange things can happen along this route. Second, the app stores still can change the way they are treating SaaS. When the Apple Appstore introduced subscriptions a few months ago, it scared shit out of many SaaS providers, because for a moment they thought they would be forced to part with 30% of their money.
Is there any hope? Actually, I think there is, at least for Android. With the two major app stores and smaller (carrier operated) rising, it creates a place for competition and this will push the pressure on the app stores to improve. At least, that’s what the theory says.
Update: as of November 2011, our Android version of the app outsells iOS version of the app.
Since our release of MobileNoter SE into Amazon Appstore two months ago, our sales have been growing steadily, but one thing remains the same: Google Android market outsells Amazon Appstore by 10 times. In other words, an application that brings $10K of monthly sales in Google market will sell for a total of $1K in Amazon market.
The ratio is pretty accurate, because we sell exactly the same application, and we don’t have any marketing or PR targeting specifically any of the markets.
And from the Captain Obvious department: both of these markets, even combined, are still being dwarfed by the Apple AppStore sales.
I decided to write about the latest and hottest startup ever – Groupon (or Grouponzi, as they call it), but this whole thing with Groupon is too complicated and getting out of control. So I will make a few short posts instead, covering only the most interesting facts. Let’s start with what a Groupon deal is:
1. A Groupon sales rep talks a merchant into a Groupon deal. This could be a toy store or a cafe, or a service like house cleaning or educational courses.
2. A typical deal is to give customers a coupon for 50% discount (sometimes more!). A customer pays say $20 to Groupon to receive a coupon and later can use the coupon at merchant to purchase up to $40 of goods or services.
3. Groupon typically takes 50% from the coupon sales and pays 50% to the merchant. This means that the merchant is paid $10 for something that they would typically receive $40 for.
4. Coupons are valid for a limited but prolonged time, like 6-12 months. The 50% off the coupon sales are paid to the merchant using the following schedule: 1/3 of the amount in 5 days, another 1/3 within 30 days, and the remaining 1/3 within 60 days. So this scheme may look like a loan to a business: Groupon gives a business money now to serve a bunch of customers for a year.
5. There is no way to exchange a coupon for money, and if a coupon is not used, the customer doesn’t receive her money back.
The benefits of this deal to the customers are obvious – they enjoys huge discounts. What about the merchants? The promise is that it’s a great marketing: you have an effective way to issue coupons and bring new customers, growing your business. Well, a lot of things may go wrong.
1. Many of the customers who walk in the door are your existing customers. It is a terrible idea to give a 50% discount to your customers (unless you are into fake pricing) alone, but you don’t even get to receive the remaining 50% – you receive only 25% after Groupon takes its share. There are evidences where total up to 90% of Groupon visitors were existing customers of the merchant.
2. Many of the customers don’t spend more than their coupon’s value is. Consider this: a guy buys a $20 coupon for $10, goes to a shop with the coupon to grab something for $10 and receive $10 in change. So, the merchant just gave away a product priced at $10, also gave away very real $10 – all this for a $5 received from Groupon. If it sounds like the merchant was screwed, it’s so because it just was.
3. A lot of customers demonstrate abusive behavior, like they tip off discounted check or don’t tip at all, they try to repeatedly use the same coupon several times, and they threat to write derogatory reviews on Yelp if anything is not to their liking.
Dropbox is one of the best known applications in the world that appeared in recent years. While Dropbox is really useful and a great app, perhaps some creative marketing helped it to go all the way to #1 file sharing app in three years. It turns out that Dropbox cleverly utilizes the same tactics that is commonly used among social gaming companies on Facebook and other social networks.
For example, once you sign up to Dropbox, you are offered to perform 5 of the following 7 steps to get 250MB of storage space for free:
Take the Dropbox Tour
Install Dropbox on Your Computer
Put Files in your Dropbox Folder
Install Dropbox on Other Computers You Use
Share a Folder with Friends or Colleagues
Invite Some Friends to Join Dropbox
Install Dropbox on Your Mobile Device
Compare this to the 5 steps that Office Wars – an addictive Facebook game – asks to do in order to become an “Office Wars Pro” and get some perks for free (that otherwise would have to be bought for real money):
However, Dropbox doesn’t stop with the list above. More simple actions will get more free storage to the users, like:
Linking Dropbox account to your Facebook account
Following @Dropbox on Twitter
Tweeting about Dropbox to your followers
Every step of the above will get you 128MB more. All this is on top of the “old school” marketing gig: any new user signing up to Dropbox off your referral link would add you 250MB of storage space for free.
It is very easy for Dropbox to utilize this tactics, because they can give away free space in small increments for just about anything: if you Like their page on Facebook, write a positive blog review about them, put Dropbox sticker on your laptop and post a photo of it – the possibilities are endless. It is much harder to do the same for a company that sells software for a one-time payment, like we sell MobileNoter SE. The company could give users discount coupons for the user actions it want to appreciate, but even this is not guaranteed to work – the biggest application store – the AppStore doesn’t support coupons.
Amazon approved MobileNoter SE into its Appstore a few days ago, and the first sales are rolling in. Amazon Appstore is weird in many ways. For example, they have the right to change the price of your app. Unlike Android Market, they take time to approve apps and they don’t reveal identity of the buyers to the vendors. On the bright side, they got transaction export into Excel right, which is still a great problem for Google.
So far, customers’ activity is about 10 times less than that of Android Market. On the other hand, all our competitors like Evernote, Catch Notes, Springpad are on the Amazon, so we couldn’t sit on the sidelines.
I find the most helpful customer review of Evernote to be very remarkable: Great app for organizing and keeping track of things as they happen, however the terms clearly states they can use, modify and distribute anything you upload for purposes of the site and sell to partners. 18 of 22 people found this helpful.
That’s exactly the biggest difference between MobileNoter and its competitors: we don’t and won’t own your notes and data. Use Dropbox, SkyDrive, or your personal server to store your notes and don’t ever worry about who can access your data.
I tried to set up an advertising campaign for MobileNoter via Microsoft adCenter recently. The idea was pretty cool. I wanted to put an ad into office.live.com pages. It should be context sensitive. For example, when there is a word “Onenote” on a page, our ad would display, offering to work with Onenote notes on iPhones, iPads, and Android devices. Another idea was to display similar ad on the tablet devices. These two properties seemed to be very relevant for MobileNoter advertising. However, I was to a big surprise. Things seemed to be so weird that I turned to the adCenter support to ensure I wasn’t missing something obvious. Below is the list of things that failed with Microsoft adCenter, including some Q&A with their support:
1. Cannot create graphics ads
Question (me): I have no option to create a graphics ad. I tried it for both keyword targeting and network/site targeting.
Answer (support): At this time we only have support for text ads.
It turned out that you can place graphics ads only if your monthly ad budget is over $10K, but the process would be manual, i.e. not through the automated interface of the adCenter.
2. No way of knowing what’s inside Microsoft Media Network
Question: What sites are included into Microsoft Media Network? Is there a list anywhere that I can take a look?
Answer: Unfortunately there is no list available of what sites are include in (sic) the Microsoft Media Network.
3. No way of knowing the sites that display adCenter ads
Question: What are specific sites that can be selected to display ads on (when you select sites, not networks)? No matter what I enter into the box, when I click “View available placements”, the system doesn’t find any suitable site for me. Is there a way to see the list of sites?
Answer: Unfortunately there is no list available of what sites that can be included in the available placements; you have to use the trial and error method of discovering these sites.
4. Cannot combine keyword and site targeting
Question: Is there any way to combine keyword and network/site targeting? I would think it’s a great way to increase ad performance.
Answer: At this time there is no way to combine keyword and network/site targeting.
5. adCenter plain crashes on Firefox, doesn’t work on Safari either
Sorry, you have encountered an application error. We apologize for the inconvenience. Please try again later.
When using Safari, it gives a polite message to go away, because your browser is not supported.
One would wonder why Microsoft can’t get a simple web application to work under different browsers.
6. Cannot select target mobile devices
When I tried to setup a campaign specifically for tablets, the only option I have is ““. You know guys, this is not good enough. I need options like to select iOS, Android, smartphones or tablets. I don’t want our ads to show up on Nokia “smartphones”, which are totally irrelevant for MobileNoter.
7. Outright scam ads served on Microsoft adCenter
When I go to live.com, most of the time it shows me an ad, which tells me that my IP address won something! If you already guessed it was a scam, you were right. The ad leads to a site, which offers to do some little SMS magic and make me eligible for winning an iPad. What the site also says in a hardly readable font is that I will purchase a subscription and be paying about $2.00 per day. Pay them money every day for a chance to win an iPad, good deal! Most of the time people who are tricked into this forget about the subscription later. One day they remember about it and discover that they already paid enough so that they could actually buy an iPad for the money. They try to cancel the subscription only to find out that it can’t be done for some silly reason, like the site gives them “Application Error”. And how it started? With an ad served by Microsoft adCenter. Very nice job, guys.