The Great Apps vs. The Web Debate

Interesting cover article in the month's Wired that has triggered a great debate across the Web.

The Web Is Dead. Long Live the Internet

Loaded with their usual hyperbole, but I do think they lay out pretty well the fundamental shift that is happening from a browsing centric to app centric experience of the Web for most users.  This graph from the article paints the picture.
Long Live the Internet
This shift has already happened on mobile platforms - apps are the dominant way that content is consumed - and the question mark is how big the iPad App model will also become.  The other key thing about Apps is they make a lot more money per user than the Web - either through direct subscription or much higher ad revenues.
The first couple of key sections from the article below.  What the shift to Apps will do is accelerate even more the winner take all rule for each niche.   #1 will be 80% of that niche.  #2 perhaps 10%.  Everybody else irrelevant.   If you buy that, then being first and dominant on Apps is a strategic imperative.

You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.

You’ve spent the day on the Internet — but not on the Web. And you are not alone.

This is not a trivial distinction. Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display. It’s driven primarily by the rise of the iPhone model of mobile computing, and it’s a world Google can’t crawl, one where HTML doesn’t rule. And it’s the world that consumers are increasingly choosing, not because they’re rejecting the idea of the Web but because these dedicated platforms often just work better or fit better into their lives (the screen comes to them, they don’t have to go to the screen). The fact that it’s easier for companies to make money on these platforms only cements the trend. Producers and consumers agree: The Web is not the culmination of the digital revolution.

Now it’s the Web’s turn to face the pressure for profits and the walled gardens that bring them. Openness is a wonderful thing in the nonmonetary economy of peer production. But eventually our tolerance for the delirious chaos of infinite competition finds its limits. Much as we love freedom and choice, we also love things that just work, reliably and seamlessly. And if we have to pay for what we love, well, that increasingly seems OK. Have you looked at your cell phone or cable bill lately?

Monopolies are actually even more likely in highly networked markets like the online world. The dark side of network effects is that rich nodes get richer. Metcalfe’s law, which states that the value of a network increases in proportion to the square of connections, creates winner-take-all markets, where the gap between the number one and number two players is typically large and growing.

Platforms

The marketplace has spoken: When it comes to the applications that run on top of the Net, people are starting to choose quality of service. We wantTweetDeck to organize our Twitter feeds because it’s more convenient than the Twitter Web page. The Google Maps mobile app on our phone works better in the car than the Google Maps Web site on our laptop. And we’d rather lean back to read books with our Kindle or iPad app than lean forward to peer at our desktop browser.

At the application layer, the open Internet has always been a fiction. It was only because we confused the Web with the Net that we didn’t see it. The rise of machine-to-machine communications — iPhone apps talking to Twitter APIs — is all about control. Every API comes with terms of service, and Twitter, Amazon.com, Google, or any other company can control the use as they will. We are choosing a new form of QoS: custom applications that just work, thanks to cached content and local code. Every time you pick an iPhone app instead of a Web site, you are voting with your finger: A better experience is worth paying for, either in cash or in implicit acceptance of a non-Web standard

Here is my take on the debate. 


1.  The mobile application - iPhone and Android for now across both "Phone" and "Pad" formats - are rapidly supplanting "the Web" as the most important channel to the audience / customer.

The mobile phone is the one device that a person carries with them at all times, everywhere they go.  If you are able to get that application downloaded and installed, you are in one of 30 - 40 slots maximum on that 'deck', as opposed to being one of millions of Web sites and one of thousands of e-mails they get each week.   When you then consider the specific utility of the platform with geo-location and transactional capabilities, it is very powerful indeed.

2.  The new iPad format will become a dominant device for personal media consumption at home, travel and leisure.

As impressive as sales of the iPad have been - don't just look there.

  • The new Google Verizon pads will be out on Black Thursday (Nov. 26th)

  • Android devices outsold iPhones last month for the first time and will become 50% plus market share within 12 - 18 months.

3.  These two device formats share an integrated platform and user experience that will trump everything else.  

For every Web media company, winning the battle to be the App chosen by users for your niche is a strategic imperative.  See the Wired article for the complete thesis.

4.  This format is highly advantageous to niche-focused Media (New and Old) companies in particular.

  • Fantastic presentation of brand and content.

  • Powerful direct channel to your audience with opportunity for lock-in.

  • Direct revenue vehicle with Freemium and Subscription Models.

  • Much higher eCPMs across all forms of advertising.

  • Should be viewed as a better way to publish than print or blogs.

5.  Being the First Mover in disruptive technology-driven market shifts like this has huge upside - and downside for being slow.

  • Riding a wave, not having to create it with marketing.

  • Great acquisition tools for the early adopter, key influencer.

  • Big PR & viral marketing pay-off.

  • Greatly strengthens presence & relationship with best audience/customers.

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