An “App”ealing Success Story
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Millions of Americans were glued to tech blogs and Twitter to be the first to know about Apple’s latest iPhone. They must have been impressed, because pre-orders for iPhone 5 sold out in less than one hour.
According to the Pew Research Center’s Internet & American Life Project, 45% of American adults now have a smartphone. These gadgets along with tablet computers have sprouted a new industry, the “App Economy,” where entrepreneurs develop and market productivity and entertainment programs used on mobile devices.
This industry has shot off the starting line faster than Usain Bolt. According to a study by economist Michael Mandel for the trade association, TechNet, 466,000 jobs have been created by the App Economy. What’s astonishing is that a little over five years ago, when the first iPhone was released, no one heard of “apps,” and this industry barely existed. Today, it’s thriving with businesses, large and small, eagerly innovating.
The House Subcommittee on Commerce, Manufacturing, and Trade looked into the growth of this industry and what policies are needed to continue on its path.
Rey Ramsey, TechNet's president and CEO, told lawmakers that the hunger for smartphones isn’t slowing with sales increasing by 63% from 2010 to 2011. He also pointed out the low barriers to entry into the app market. “If you have a computer, broadband connection, and the right skills and software, and you can start coding.”
Morgan Reed, executive director of the Association for Competitive Technology, told the subcommittee that 78% of the top app developers are small businesses, and as mobile technology pushes further into the workplace and education, it means “another wave of innovation [is] on the horizon.”
On the policy front, both Ramsey and Reed worry about adequate bandwidth on the wireless spectrum for larger apps featuring high-resolution graphics. They are both also concerned about the lack of intellectual property protections in international markets where users are more likely to install pirated copies of apps.
Peter Farago of Flurry, a company that works with app companies, told the subcommittee that the lack of skilled workers is also a concern for the industry. He surveyed Flurry customers and found that 71% of them need more employees with technical training and only 24% of them could find enough skilled software developers.