Death by 1000 Cuts: How Mobile Devices are Killing Web Software Companies and Endangering Small Business – And What They Can Do To Avoid the Scalability Trap.
Victims of Their Own Success
Over the last decade, the vast majority of businesses have moved to web delivered software to power their organizations. Web software powers both internal processes like financial payments, controls and HR, and external customer interactions like e-commerce, promotions, customer care and support. As this trend evolved, the price point for these services declined as the quantity of powered businesses exploded. So far so good…
It’s hard to find a business today that isn’t in some significant way enabled by web-delivered software. This trend has only accelerated in the last five years, even as mobile devices running iOS, Android, etc., have redefined how customers interact with software and the Internet, and by extension, how they interact with these businesses online.
While everyone is focused on the success of the app store phenomena and the explosive growth of mobile, this new business reality represents a significant threat to web software companies. But why?
The Scalability Trap
It boils down to three realities: Native Mobile Development is difficult, Native Mobile Development is expensive, and although providing an “m-dot” mobile optimized site is an important step, it isn’t enough.
First, native app development, deployment and maintenance is difficult and is a fundamentally different paradigm from the write-once-run-in-a-browser world of web software. Building and scaling teams to handle this is non-trivial for a single application across multiple mobile platforms. But for web software companies that power other businesses, whose customers require individual instances (customized
for their brand, look and feel) the job is impossible. A review of only one aspect of scaling, the task of collecting app store related assets for each customer instance multiplied by the number of platforms multiplied by customers reveals a cost that leaves no room for profit and is therefore impossible.
Second, the SaaS-based business model employed by the majority of these companies isn’t compatible with current mobile development economics. The average single-platform native mobile app development cost is north of $30,000.
If a small community bank pays an Internet Banking Platform company less than $30,000 per year to run their entire operation, spending $30,000 on an iPhone app that provides customers with access to their accounts doesn’t make sense. Thus, there is a disconnect between the cost to create native mobile applications and the potential revenue/value that they generate.
Third, while it’s true that many of these software companies have adapted in the last 12 months and now offer mobile-optimized versions of their web software, customer preferences are driving demand for native, app store ready versions of these products. Mobile web is a stopgap solution, but it doesn’t get them where
they need to be; neither from a customer satisfaction or feature basis, nor from the perspective of generating significant lift in product revenue.
The solutions in the market today don’t address these realities. To get the next 3 million apps into the app store, and (in the process) preserve and grow the $12 billion dollar SaaS/Web Software space, a new, scalable approach is needed.
There are three keys needed to unlock this market opportunity:
1. A systematic platform-based approach needs to be adopted. Web software companies need to be able to focus on their core business. Any solution that hopes to scale must target these web software companies, and not the underlying businesses they’re powering. Don’t try and reinvent the wheel thousands of times.
2. Leverage the mobile web investments that these companies have already put in place in their products. These m-dot (mobile optimized web applications) eliminate many of the long-term challenges for maintaining and updating instanced versions of native applications.
3. This platforms-based combination of m-dot, hybrid approach has to offload the scaling and maintenance aspect for deploying and managing these applications away from the software companies and end customers, while providing a web-services approach for native features and push messaging (which is so central to customer-care and business workflow applications). In this broad context of a solution, Unwired Nation stands out. They recognized early on that mobile represented a significant threat and opportunity in this space, and built their patent-pending platform from the ground up to address these issues.
Unwired Nation represents a low-risk, fast-to-market approach for capturing new revenue and locking in existing customer’s mobile business.
The company has landed strategic partnership deals with a variety of high value web software companies in a broad range of industry verticals, from Internet banking to pharmacy, from automotive dealership management to conference and tradeshow software. These verticals have proven to provide Unwired Ready™ partners – those partners that not only face the multi-brand Scalability Trap, but have also taken the next step of having an m-dot solution in place. In each case, Unwired Nation unlocks the partner’s ability to generate millions of dollars of incremental revenue by selling branded native applications based on the company’s core product offerings into their established customer base.
On March 20, 2012, the company announced a partnership with Rackspace to help bring it’s Unwired platform to Rackspace’s 170,000 customers, thereby effectively going to where these Unwired Ready™ web software companies effectively “live.” There is significant synergy between Unwired’s hybrid application approach and Rackspace’s core cloud and hosted offerings, which drives value for all parties.
Unwired Nation is the first company to recognize the multi-billion dollar opportunity that the transition to mobile software represents. If they are successful, they will help define (and ultimately power) the future of mobile business applications.