Monday, November 19, 2012

Parallels between dot.com era and mobile application gold rush

There was an interesting article in New York Times this weekend that made me reflect on mobility gold rush and takeaways from the dot.com boom-and-bust we experienced not so long ago. (#NYT: As Boom Lures App Creators, Tough Part Is Making a Living)


The theme of NYT story reads almost identical to several stories chronicling the dot.com and eCommerce gold rush during late nineteen nineties. The author, David Streitfeld, picks two distinct examples of entrepreneurs in mobile app development space to highlight success and struggles. If we distill the key takeaways from that “era,” a few patterns emerge

  • Dot.com era: Legions of developers joined the dot.com gold-rush but only a few entrepreneurs created blockbuster tools or websites and successfully cashed out early by selling them for multiples of million dollars (remember Sabeer Bhatia of Hotmail, Pierre Omidyar of eBay?). 
  • Parallels in Mobility era: NYT Article quotes Ethan Nicholas who made more than $1 million on an artillery game mobile app. Nicholas is an early mover in the mobile era if you will. Of course, the real blockbuster in all this is Apple’s iPhone and iPads application eco-system that other technology companies are trying extremely hard to emulate.

  • Dot.com era: The dot.com one burst in Year 2000 leading to a huge wipeout of investments and dreams of a generation of techies.  
  • Parallels in Mobility era: Nokia, Research in Motion continue to flounder – at least the stock market thinks they do - while even tech giants like Microsoft try to find their way around the tectonic shift to mobile computing and applications.

  • Dot.com era: Despite the bubble and bust, a few really successful businesses with innovative business models – eBay, Amazon, Google, priceline et al – took off and continue to grow and thrive 
  • Parallels in Mobility era: Not sure if the story of Shawn and Stephanie Grimes in NYT article would fall into this category yet. Their efforts to develop breakthrough products have cost $200,000 in lost income and savings. Their apps have earned less than $5,000 this year. This said, the mobile-app ecosystem is huge. Apple alone claims to have paid out over $6.5 Billion in royalties to mobile app developers and entrepreneurs in the past few years.

  • Dot.com era: technology globalization and offshoring boom. The dot.com gold rush was not restricted to the US alone. It continued around the world: India, China, Brazil, Europe all have their favorite dot.com boom-and-bust stories. 
  • Parallels in Mobility era: A good percentage $6.5 billion in royalty payment by Apple went to application developers overseas, a micro-offshoring boom if you will.

There are other similarities between dot.com and mobile application segments with learning’s for entrepreneurs too. eCommerce has become mainstream with most – if not all - brick-and-mortar companies and retailers embracing additional channels to reach out to service and sell to customers. Hundreds of thousands of smaller entrepreneurs, consultants and programmers continue to survive thrive servicing and e-enabling enterprises large and small. And few innovative models continue to emerge. In the past year alone, Facebook went forward with a multi-billion-dollar IPO, and went on to buy photo sharing service Instagram for $1bn.

Just like in the e-commerce gold rush boom, the gold diggers with a spade - mobile application creators - continue to struggle to make a Living, searching for the next blockbuster …. While the spade sellers like Apple who staked out the landscape early continue to thrive. Other tech majors continue to learn from and emulate Apple’s model. Google (with android ecosystem), Amazon (with its kindle ecosystem and ecommerce engine) and Microsoft (windows 8) have taken a playbook from Apple and are competing to create similar ecosystems for application developers.