App Direct

1. Is there a market for business app marketplaces? If so, do you think the market will be fragmented or concentrated? How do you think the market for business app marketplace will evolve going forward?
Yes! There is a market for app marketplaces. The big platforms such as, Google, Apple, etc. are more focused on serving large enterprises while few platforms with different business models are more focused on Small and Medium Enterprises (SME). SME segment comprises of large number of companies that can benefit not only from the variety of apps available but also from the different services offered by some of these platforms. The value proposition for SMEs is appealing as apps can help them cut costs, or change fixed costs to variable costs thus becoming more efficient and competitive. Moreover this is not a ‘Winner Takes All situation’ as it is a not a monopoly (no platform can own all the developers). Further multi-homing costs are low, network effects are not strong, platforms do not have strong preferences for themselves and the market needs customization. Since the market potential is quite huge and barriers to entry are quite weak we expect that many new companies with similar offerings will emerge leading to a fragmented market in the short to medium term. It doesn’t mean though that platforms such as AppDirect and it’s competitors will be able to reach out these potential customers. The choice where to start from and how to start can define the fate of small platforms.

Since we already have some of the big names already operating in the space we foresee a consolidation in the industry wherein the small companies will be bought over. With these acquisitions the barriers to success will be further raised. In the medium term there would be bigger technology companies offering full suite of application related services to businesses across industries. The big platforms will target smaller platforms with a rich portfolio of clients and...