Summary
For entrepreneurial software developers weighing the risks and benefits inherent in the mobile market, getting product to the customer is a key concern. It's clear you won't get much help from carriers, who seem to be convinced that software is just something they give away in order to help sell phone plans. That's the bad news.
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Here's the good news. If your target market is North America or Europe, there is an uncomplicated, low cost option for marketing, selling and distributing mobile apps and content: Handango.
Handango is the world's premier mobile content provider, with a reputation for being both developer and customer friendly. I caught up with Handango's Will Pinnell, Senior Director, Strategic Alliances March 12, 2008. He had some interesting things to say about the mobile content opportunity and how small and entrepreneurial developers can play in this global market.
Interview with Handango's Will Pinnell, Senior Director, Strategic AlliancesNN:Could you start by giving us a bit of perspective on the mobile content market and Handango's position in it? How has it changed over your time with Handango?WP: I've been with Handango for eight of its nine years. When I started with the company, we had a dozen employees. Today we have something better than 140. I've seen Handango and the broader mobile industry grow from a small niche market focused on enterprise-oriented early adopters to a ubiquitous mobile culture that cuts across every demographic and interest group.
The significant market changes I've witnessed have to do with a pair of mutually reinforcing trends. First, as devices have matured and become more useful, an ever broader cross section of consumers has recognized their potential to make life better, more convenient and more flexible. As a result, people have become increasingly accepting of higher price points. At a certain volume, economies of scale take over. We are beginning to see very sophisticated feature phones for around $200. This price point has accelerated adoption, creating a large and growing population of highly capable devices. Big numbers of highly capable devices offer software developers more opportunities to innovate. So that's the second thing I've observed: A proliferation of great apps and compelling content. We've reached the point where consumers are attracted to mobile devices not for the capabilities of the bare metal, but because of specific content they want to use and enjoy.
Handango positions itself at this intersection of increasingly sophisticated and diverse consumer demand for content on the one hand, and blossoming developer opportunities for innovation on the other. In addition to our online stores and on-device application portals, we provide white labeled storefronts for companies like Verizon, T-Mobile, Alltel, RIM, Microsoft, and others. We put thousands of developers' products in front of a vast global audience of interested, motivated consumers.
NN:Explain the term "white label storefront".WP: By this I mean that Handango provides a single point of web and on-device presence where developers can offer, and consumers can find mobile applications and content for virtually any device, operating system, carrier plan or use case. We maintain an extraordinarily open, convenient, accessible marketplace, benefiting both consumers and developers.
NN:Talk a little about where you see the market for small device content going in 2008.WP: Handango enjoys a special insight in this regard, because we have millions of unique monthly visitors and customers, drawn from a global audience. It's become apparent to us that we are in the midst of a dramatic shift from early adopter to main-stream consumers. A key feature of this trend, and one that is of particular significance to developers, is that Handango's customers are increasingly purchasing content directly from their devices, rather than using desktop based web access. Given this evolution, it's not surprising that our developers are telling us that marketing through Handango storefronts can deliver triple digit percentage increases in their sales.
But it's not just that we give them greater visibility by aggregating audience; We also help them find and recruit new and nontraditional customers. Last year, for the first time in Handango's history, entertainment content outsold business centered applications and content. This represents a shift in the demographics of smartphone adoption and suggests we can expect strong growth in smartphone sales among new categories of users: busy moms, youth, and connected mobile lifestyle content consumers.
NN: Where are the bulk of your content customers? Your developers? WP: Handango's business is currently split about 60/40 between North America and Europe. These are fairly different markets in terms of structure and consumer preferences. In 2007 in North America, Motorola, Palm and Blackberry devices lead our download stats, with content preferences biased toward traditional enterprise adopter demographics. Our strongest numbers in the European market center in Western Europe. In terms of downloads, we see the English, French, Italian and German language content leading the pack. Nokia and Sony Ericsson devices powered by Symbian OS are the most popular smartphones there.
NN:Can you talk a little about your business model? As the most widely used mobile content download provider in the world, how does Handango recruit developers? Carriers? Customers?WP: So far, we've been very fortunate in recruiting developers. They come to us, and with good reason. We provide international visibility they simply can't get from any other source. We offload all of their marketing, payment processing and accounting burdens, letting them concentrate on software development. Handango's storefront gives them great flexibility, control and service levels for presenting content to their target customers. They can track sales performance with precise granularity and receive timely, auditable compensation. We quality test the content we sell, currently at no cost to the developer. Because consumers know the content they get from Handango is both reliable and 'squeaky clean', consumers trust us, which, by association, builds the brands of our developers.
As most people in the industry know, it is very difficult for developers to work directly with carriers and service providers. Navigating the bureaucracy of a large provider can take months, and is often fraught with difficulty and frustration. Even if you are successful at placing content on a provider portal, compensation can be challenging to track and collect. This is largely because the carriers' business models simply aren't structured in ways that give them incentive to work with small, entrepreneurial software developers. They work with us, however, because we can aggregate content sales, making the relationship profitable for them as well as for developers.
NN:So you are saying that Handango's "white label storefront" concept makes the market for small device content efficient by concentrating niche apps and content in a single, highly visible location?
Yes, and we do this to benefit the customer as well as the developer. We currently market about 185,000 titles. A good many of these don't sell very often, but Handango's visibility has allowed niche developers and consumers to create a "long tail" marketplace for specialized mobile content. This is a service you can only provide if you have a very large, global audience. Handango uniquely does this in the mobile content marketplace.
NN: Talk a little about how developers create a relationship with Handango.WP: Developers apply to become Handango Content Partners. Pretty obviously, we do some vetting to ensure that we are dealing with a legitimate developer entity, but this is a rapid process. Developers can upload their content directly to our servers once they have Partner status. We test the market readiness of apps and content, ensuring it installs, runs and uninstalls properly and that it doesn't interfere with calling or other apps.
When content receives Handango Market Ready Status, developers set their own prices, supply their own description and have access to online sales tracking resources. They can even be notified every time someone downloads their products. Handango uses a closed loop sales accounting process and developers receive monthly royalty payments. We give our highest sellers extended support, but for all of our developers, we spend the time and resources necessary to figure out how to best position their products to maximize downloads. After all, we are in this as a team to sell as many products as possible.
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