Application Platforms Duopoly
App stores are the most dynamic and important point of control for the industry, all roads in the app economy, currently lead to the app store. This is in terms of economic outcomes, revenue generation, and governance.
The USA and China are the dominant countries in terms of value captured by developers located within their territories. With revenue capture skewed towards large industrialised economies.
Drivers of Growth in the App Economy
Increasing smartphone adoption
High-speed wireless networks
Accelerated innovation through incentivising the developer community
Changing consumer engagement with digital content.
Consumers focus only on the dominant brands. And make decisions based on top ranking lists and reviews
The app economy, in the west is dominated by the proprietary platforms of the Apple store, for Apple and the Google Play store for Alphabet. Android is the fastest growing technology platform in history, reaching 1 billion users in only 8 years. iOS and Android own 14.6% and 82.2%, of the global market, with a total market share of 96.8%.
App Store Growth 2014 - 2017 (M)
There are alternative platforms, such as Facebook and Line. However, their market share is significantly smaller in comparison to the two Goliaths.
New App Released from 2012 -2017 (M)
Apple operates a closed operating system called iOS, with applications closely linked to its smartphone. Alphabet's operating system Android, is open sourced, and is available to all hardware manufacturers.
Multi- Sided Marketplaces
Digitally connected markets, like Tencent, Grab & Uber increase efficiency on both the supply-side and sell-side of a marketplace. The Apple and Android platforms are two-sided marketplaces, where buy-side actors (end-users) and sell side actors (app developers) meet to exchange value. The network effects of these platforms, increases in value as more actors on the buy and sell side, of the platform, become part of the ecosystem.
The value online platforms, garner is closely linked to their efficiency at matching buyers to sellers. Through, harnessing the speed and scale of the Internet and eliminating the transaction costs associated with conducting commerce on the web.
Leading to the development of large and diversified markets, increasing the potential of organisations to profitably serve niche markets. Defined as the long tail by Chris Anderson.
Furthermore, the applications market, represent the first truly global market for digital goods. Insofar as goods, can be produced anywhere, distributed at almost no cost, and consumed wherever there is a network connection. Lower barriers to entry, and the scalability of digital products, offer more accessible economic opportunities for sell-side actors. Irrespective of socioeconomic status, and or geographical location.
Marketplaces, like the platforms mentioned below; are a socially constructed system with policies, architectures, and intrinsic biases that govern participation and outcomes. Although the USA, is currently the dominant player in the app economy, platforms originating outside of the USA. Include, Rakuten (Japan), Delivery Hero (Germany), Naspers (South Africa), Flipkart (India) and Javago (Nigeria).