Tuesday, March 16, 2010

State of Mobile Apps Before the iPhone

iPhone too closed?

Before complaining about the iPhone being too closed, keep in mind what the state of mobile phone apps was like before the iPhone.

A $1.99 ring tone, wallpaper, or app delivered "over-the-air" would earn the developer less than 50%. About 95¢–$1.10 went to the wireless carrier and about 10¢–15¢ went to the short code provider (SMS aggregator) - not to mention the 2.5¢–5.5¢/SMS sent.

Each purchase required at least two SMS text messages to be sent to the buyer in order to meet the carrier's double opt-in requirements. Additionally, the wireless carriers would only allow content to be sold which could be "consumed by the phone". In other words, none of the carriers would allow you to walk up to a vending machine and make a purchase that would show up on your phone bill.

Also, every developer had to negotiate a deal with each wireless carrier in order to get them to support your SMS short code. If a carrier didn't approve your short code application then no wireless subscribers on that carrier's network could access your service.

Short codes are expensive (the short code, SMS aggregator, etc. typically costs more than $2000+/month) resulting in a $15K-$30K per year expense not including the costs of sending each SMS.

It has been less than three years since the iPhone's introduction and how quickly we forget what it used to be like.

You can see the details in this two year old SMS white paper.


Anonymous said...

The costs of running a short code campign as compared to other costs for e-mail, television, direct mail, web or print advertising is about the same price, but response rates when using a sms campaign will be sometimes 10-20% higher than these tradtional media. Also you can add shortcodes to all exisitng media, and make it more interative and get immediate response

Joe Moreno said...

Interesting perspective, but ad campaigns are not how most short codes are used. Just look at 40404 (Twitter) which probably generates more traffic than any other short code in North America.

Are you from Neustar?