These days, downloading software applications for a smartphone is a breeze. But good luck trying to share that fun game or handy work-productivity tool with someone else. Sure, a handful of apps feature "tell a friend" buttons that let you alert others to an application you found useful, but if they want to check it out for themselves, they'll have to download it or look over your shoulder.
A handful of upgrades from some of the biggest names in mobile software is set to upend the way smartphone users get and share apps. Apple's new iPhone 3.0 software includes features that, if activated by Apple, may let users share software with one another, according to a person familiar with the technology. Eventually, iPhone users may even get a commission when they've induced someone else to make a purchase, says Richard Doherty, director at consultant Envisioneering Group. Apple spokeswoman Jennifer Bowcock wouldn't discuss features that might be available in the future, saying only, "We've made no announcements at this time."
Separately, a group of software developers led by Google is also considering enabling user-to-user gifting and recommendations through its mobile applications store, Android Market, a person familiar with the plans tells BusinessWeek.com.
Will new features spur sales?
By enlisting cell-phone users to play a role in distribution, these features could dramatically increase sales of apps, music, and movies for cell phones. As it is, revenue from mobile applications for consumers is expected to exceed $25 billion by 2014, as companies like Microsoft (MSFT) open stores, joining the ranks of existing online marketplaces including Research In Motion's (RIMM) BlackBerry App World, Apple's App Store, and the Android Market, according to consultant Juniper Research. Analysts estimate that sales of these applications added up to less than $1 billion last year.
User-to-user recommendations could make discovery of new apps and content easier. Most mobile app stores today offer top 10 lists of the most popular apps and let users post reviews. That aids navigating the more than 35,000 apps in the Apple App Store and nearly 5,000 in Google's Android Market. "As every day passes, it gets harder to rise above all that noise. It's difficult to be found in the app store," says Michael Boland, a program director for consultant The Kelsey Group. Developers have long urged Apple and other services to include tailor-made buying recommendations, based in part on past purchases, that are now commonplace on e-commerce sites like Amazon.com (AMZN).
But user-to-user recommendations could be even more relevant, and it's been proven they drive up sales in the case of at least one wireless device, Microsoft's Zune digital music player. Zune lets users share content, such as songs, via Wi-Fi. "The top two places people get recommendations for their music is FM radio and friends," says Brian Seitz, group marketing manager with Microsoft Zune. This fall, Microsoft plans to unveil a new recommendations engine that will use friends' song lists to come up with better suggestions for purchases for each user.
Mobile P2P Sharing
These new viral features will also come in handy amid the proliferation of so-called peer-to-peer applications, which let people transfer content directly from one phone to the next. Peer-to-peer is nothing new in the fixed Internet world, where many people use services like BitTorrent to watch each other's movies.
But peer-to-peer services have been slower to take off on wireless networks. "P2P is going to have a major impact," says Robert Rosenberg, president of Insight Research.
One example of P2P connectivity will be available in the new iPhone 3.0 software, due this summer. Users will be able to play multiplayer games with one another using Bluetooth connectivity, rather than needing to be on a carrier's network. A player's phone will automatically detect nearby iPhones and iPod touches that run the same app and send them an invitation to join the game. Initially, the feature will work only when both parties already have a particular app. "Now you can sell copies of your app to two players instead of one," says Dave Howell, a former Apple engineer who now runs peer-to-peer file-sharing apps maker Avatron Software. In the future, a player may be able to invite another to a game when the second person does not yet own a particular app. Such invitations could trigger additional purchases.
Another technology driving the rise of user-to-user transactions is called Near Field Communication, which will allow people to share content and applications simply by touching their devices. "This could be a very simple way of transferring information," says David Wood, an executive at smartphone software maker Symbian, owned by Nokia. NFC technology may also transform cell phones into mobile cash registers. "A lot of people are going to use mobile devices in place of their credit cards or loose change" to purchase groceries at a local stores or to buy a song off their friend's playlist, Wood says. Symbian plans to release software making it easier to embed NFC capabilities in mobile applications in mid-2010, he says.
Smartphones and Cloud Services
Increasing use of so-called cloud services, which allow users to share content stored on outside servers, could make user-to-user mobile transactions more common as well. One example is Web-based services like Cloudtrade. The Ann Arbor (Mich.) startup, which is currently in a test phase with 2,000 users in the U.S., lets cell-phone owners share songs, photos, and applications. Users can browse each other's music libraries and download each other's favorite songs and apps for free, though they have to watch ads. Customers can also include links to content or applications, such as games they liked, in text messages to friends.
The rise of user-to-user transactions could have some negative impact on applications and content providers. While a few developers have built "tell a friend" buttons into their apps, these home-grown pushes "almost universally turn people off," says Apple developer Erica Sadun. Many users resent being marketed to, she explains. What's more, greater user-to-user sharing could weaken the hold content providers like Apple's iTunes service have on their customers and open customers up to using other stores. After all, such sharing "is inherently subversive of the walled garden," Rosenberg says.
But for consumers who are happy to get recommendations from friends and peers—and the developers who stand to gain from increased distribution of their apps—those walls can't come down fast enough.
Kharif is a senior writer for BusinessWeek.com in Portland, Ore.
