The future is shiny for Asia’s mobile apps ecosystem

For mobile app developers in Asia, the near future presents tremendous opportunities to capture a wider audience. That’s because Asia appears to have insane growth potential when it comes to mobile devices and applications, if what recent studies and experts have been saying are true.

The latest voice to add to this optimistic choir is a joint study by Google and Ipsos, which found that the Asia Pacific region as a whole has the highest mobile phone penetration in the world. Asians also display a willingness to shop and play on their devices, more so than other people.

The report, Smartphone Research on Mobile Internet and Market Trends, spanned 11 markets in Asia Pacific and 19 elsewhere. Conducted from March to July, it compiled about 30,000 responses in total.

More interesting nuggets to salivate on:

• More users in Asia Pacific (sans Australia and Malaysia) find their smartphone more interesting than TV as compared to US.
• Four Asia Pacific markets have a higher smartphone penetration rate than the US (31%). They are: Singapore (62%), Australia (37%), Hong Kong (35%), and urban China (35%).
• Over 80% of smartphone owners in Indonesia, Australia, and India are using it for the first time. This indicates that the smartphone phenomenon is a new one.
• Singaporeans, Japanese, and Koreans are glued to their smartphones more than Americans, bettering them at surfing, emailing, searching and video sharing (just look at the number of people flirting with their phones on Singapore trains). Other markets, however, lag behind the US, although this may change as more users clamor for a smartphone.
• Singaporeans are the undisputed kings of mobile social networking, beating every market studied.
• Thailand, Singapore, and Indonesia are the keenest online mobile shoppers around, beating the Americans. Malaysians are visible in the rear-view mirror. Incidentally, while Singaporeans are prolific online shoppers, a recent eBay study has shown that they are busy exporters as well.
• Developing markets are “determined to use more apps” as compared with developed countries around the world. For instance, roughly 60% of Malaysian, Thai, Indian and Indonesian consumers plan to use more apps, versus only 39% from US and UK consumers and 45% from Japan.

Shiv Putcha, mobile market analyst at Ovum and author of the report, warns that mobile operators must plan for a future surge in mobile Internet traffic. Otherwise, they could encounter poor service quality and falling revenue. Ovum has predicted that small-screen devices like the iPhone will account for 77% of all mobile broadband connections in emerging markets by 2015, or about 1.6 billion connections.

That’s about the population of China and Indonesia combined.

While smartphone usage in Asia Pacific is certainly growing at a phenomenal pace, app monetization has not quite caught on as compared to the West. At the recent Apps World Asia 2011 held in Singapore, Thomas Clayton, CEO and president of Bubble Motion, a social media messaging app developer, dished out some statistics at the start of a session he was chairing.

In-app purchases in Asia are still quite low compared to the US. In China, only about 30% of users buy items from an app while the rate in the US is much higher, at 70%. Ashwin Venkatraman, director of mobile payments at InMobi, a global mobile ad network, noted that Asians also appear more reluctant to pay for apps and would rather download them for free (see article).

He attributed this to the fact that in the US, Apple started off charging for apps on its App Store, which meant consumers became used to the idea. In Asia, on the other hand, consumers are quite used to the idea of getting apps for free and are reluctant to pay. In-app purchases would become the favored way of getting Asians to part with their money.

However, Ashwin also noted that while the percentage of willing payers in Asia may be low, their sheer volume and growth more than makes up for it, which makes Asia an attractive market for app developers. On the other hand, mobile apps purchases in Western countries are either plateauing or declining.

The recently released report and the numbers cited by the speakers dovetails with other timely data point to the same trend.

For example, the MEF Global Consumer Survey revealed that 84% of Singaporeans have used their smartphones to research on or purchase goods, while 63% of Indonesians have sent airtime remittances via mobile.

Meanwhile, the International Data Corp is predicting that by 2015, about 21 million units of tablets will ship to 13 major Asia Pacific countries.

That’s a staggering 10-fold growth from 2010 — which means more work for the tablet undertaker. Expect a boom in the used tablet market soon.

On the flipside, the explosion in mobile devices and apps doesn’t mean app developers will have an easy time making money. Market fragmentation is a problem faced by ambitious Asian developers, and it will be even more so in the near future.

Consider the diversity in Asia Pacific countries. Distributing your app in Indonesia is different from doing it in Singapore and especially China– which has an entirely different app and social media ecosystem altogether. Entrepreneurs will also have contend with different languages, cultures, and device preferences, making what I call “parachute entrepreneurship” an unwise practice.

If you’re an American, for instance, don’t expect to take your preconceived notions and methods to China and expect your app to take off. Partnerships with local firms will become essential, and so is intimate understanding of local culture. Groupon learnt this the hard way, when its Super Bowl ad pissed off many Chinese for its reference to the Tibetan issue.

As long as you pair an understanding of local nuances with a killer app and sharp business instincts, it looks like Asia could be your potential goldmine. For the longest time, Asia has been caricatured as savers while the West as spenders. But as one economist mentioned, we are seeing a re-balancing of the global economy where consumer spending by Asians will grow astronomically — akin to the period just before the Asian Financial Crisis in 1997.

The only difference? Mobile app developers weren’t around then to cash in.

Top photo: Miki Yoshihito

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