From DreamSpring's perspective, the same issues are very significant. Despite the smartphone market being so large, the market for third party applications seems woefully small. Why is this?
Certainly the prevalence of cracked software is one contributing factor, and a very major one at that.
Our own research has uncovered cracker forums where people gather, praise DreamConnect (our major product and money-maker), and ask when the cracked version is coming out. Can you imagine how galling it is for people who have spent bucket loads of money and months of effort crafting a product to see users praising a cracker for his crack of that product! What are these crackers, and more to the point, those who use the cracked software thinking?
And that's a valid question. Do people really think US$25 is too much to pay for software that they'll freely praise on a cracking forum? It seems so. It seems that they'd rather run the risk of installing trojans on their phones than pay a lunch or two to support the product (and to get product support).
Trying to understand why people do that is critically important. I'm not going to pretend that I have the answers, but here's a few thoughts. If you have anything to contribute, such as your reasons for hesitating to buy software, please leave comments.
My own attitude
Before I get started, I should make it clear that I find myself reluctant to pay money for software to run on my smartphone (a P990i, which I am very happy with). So I can sympathise with those who are reluctant to buy software. However, long ago, I made a decision to not copy software (or CDs, etc.). If I'm not willing to pay for it, I don't deserve to have it (assuming "it" costs money).
As a result, I try to find freeware to do what I need, or just get by without it. On P990i, I use the free version of Swiss Manager, for example, because I don't feel I can justify the pro version. I also use Mobipocket because it's free. I currently only have free Bibles in Olivetree (although I plan to buy a modern translation). I own a copy of Documents To Go (because I finally gave up on QuickOffice and it's buggy Bluetooth keyboard interaction), and that's about it (apart from DreamConnect, of course, which fixes several fatal flaws in the Contacts application).
So I understand a bit of where people are coming from, and these thoughts come from my attitudes as much as observing others.
Volatility of the platform and device
A major factor in my reluctance to spend money is the volatility of the smartphone platform, and the limited working lifetime of the phones themselves.
Take a look at this page from nokia: S60 Platform Evolution. Note that in S60's short life so far (up to S60 3rd Edition), we've had two compatibility breaks (one fairly major, and one complete). (UIQ has had only one break, but that was huge. Our porting effort from DC 2 to DC 3 was equivalent to porting from UIQ 2.1 to S60!)
Add into this the fact that people change phones regularly, and you can see that, even if they remain loyal to the platform, there is no guarantee that their current investment in software will transfer to their next phone. In fact, with such major breaks in compatibility, vendors will almost be forced to charge again for their new versions (as we did, due to the huge effort involved).
And people don't remain loyal to one platform, since these devices are more than just computing platforms. People make decisions on which handset to buy based on lots of features, not just their software platform.
Phones differ vastly compared to PCs. Just think how different an N95 is from an M600i:
- Different OS
- Totally different pointing mechanism (nothing -- a joystick is just arrow keys arranged in a certain pattern, it is not a pointing mechanism, unlike IBM's keystick, or a touchpad -- vs. a touch screen)
- Lots of application-specific buttons (music) vs. one (internet button)
- Numeric keyboard vs. Qwerty keyboard
- Thick vs thin (this is the trivial sort of difference laptops manage, but it's more important with phones, because you carry them in your pocket)
- GPS vs. none
- Wi-Fi vs. none
- 5MP camera vs. none
- Different included applications
These differences are huge compared to the differences between a MacBook Pro (which our marketing department uses) and a Dell laptop (engineering -- how stereotypical, eh?). The main differences between these two is the different platform, different included apps, and different thickness. They both have virtually identical technology included. Oh, the MacBook has a built-in webcam (which is utterly pathetic compared to even the most basic modern cameraphone), but newer Dells have that too.
So, given these differences, platform and software compatibility are almost swamped in the decision-making process.
The end result of all this is that a user of smartphone software only has a very short period to get a return on their investment. This leads to a very tight market for ISVs.
User Attitudes to Phones
Another contributing factor, which is related to the volatility of phone platforms, is the general attitude of users towards phones. Very few users think of phones as software platforms. In fact, most people I talk to view a phone in much the same way they view a washing machine: it's an appliance that does what it says on the box (or not, depending on quality).
So the vast majority of smartphone buyers simply don't look for add-on applications. The only way to change this attitude is by a concerted effort from both the handset manufacturers and operators. The handset manufacturers have finally started doing this, through various measures from branding to prominent positioning of a link to the software shop, but the operators are still bumbling along.
From my observations, it seems likely that the user needs to be presented with the opportunity to extend their phone while they are in the process of purchasing it. This would require the operator's shops to have some form of mechanism (along with limited training for their staff) which would profile the user and present them with applications that they would be likely to find useful. If they could then purchase these apps included in the price of the phone and plan, then I would expect much better uptake. At the very least, a range of applications should be visibly available for purchase at the retail shop.
But I have never yet seen this done, and I've searched across several continents.
Conclusions
Piracy is a serious issue for mobile software developers. The nature of the hardware platform encourages it, and the nature of the retail process discourages proper purchase of software.
Moves to make pirated software easier to detect are only useful so far as users desire to avoid pirated software. Currently, there is not a great desire to do so, and large-scale promotion is required to remedy this.
So, ISV's simply have to hope that the operators and handset manufacturers wake up to the value that independent software adds, and try to protect and encourage the industry before it gets starved to death.
Addendum (27th Sept)
I've just bought a new phone in Hong Kong, one of the most open mobile phone markets in the world (almost all phones are unlocked and the vast majority of new phones are sold SIM-free). It was a new Sony Ericsson P1i, which has just been released here and seems to be selling well. During the sales process I was allowed to see the phone working, shown the IMEI number on the screen and on the box (for guarantee purposes), and given gifts consisting of a box of Chinese add-ons (a third party battery, USB battery charger, and phone case) and an Adidas cap. At no point was I offered any extra software for the phone. At no point was it even hinted that this devices could be used for features beyond what came in the box.
I bought this phone at one of the largest retailers in HK: Broadway (the big shop in Mong Kok, on Sai Yeung Choi St N). So that's the situation in one of the more progressive markets. What hope do we ISV's have elsewhere (apart from very close relationships with the operators or handset vendors)?
