Economic Value Creation in Mobile Applications
New mobile development platforms are a 21st-century growth pole. By successfully recombining existing information technologies with new innovations, they have spurred a positive feedback loop of consumer adoption of mobile devices and firm entry into a wide variety of applications, or "apps." Despite its tremendous size, the industry is still at an early stage, with rapid growth and a wide variety of economic experiments exploring how this new industry will create economic value. Because there are numerous and growing app markets, the industry needs economic institutions to support market experimentation. However, the volume and diversity of app product entry has created problems for marketing and commercialization, especially matching consumers to products.
This early pattern is like many earlier information and communications technology industries in that it shows a pattern of technical success but commercialization struggles. However, several important new issues arise, including a bias against entrepreneurial commercialization, and the importance of end-user demand in determining market evolution. We consider how this situation has impacted the industry's task of discovering economic value and choosing among different app and platform features to make its ultimate contribution to economic growth. We also consider the likely market and institutional responses to the current bottleneck.
This research project is based on data collection and analysis over a wide range of data sources. We are very grateful to a number of research assistants who have worked on those datasets, gathered industry information, and joined us in industry interviews. These include Markus Baldauf, Sean Batir, Robert Burns, Jane Chen, Sherry Fu, Osama El-Gabalawy, Carlos Garay, Jorge Guzman, Alireza Forouzan Ebrahimi, Tim Jaconette, Nayaranta Jain, Julia Kho, Sigtryggur Kjarttansson, Xing Li, Derek Lief, Sean Mandell, Laura Miron, Jaron Moore, Yulia Muzyrya, Abhishek Nagaraj, Joe Orsini, Francis Plaza, Hatim Rahman, Sam Seyfollahi, Melissa Sussman-Martinez, Masoud Tavazoei, Sylvan Tsai, Julis Vazquez, Joon Yoo, and Parker Zhao. We are also very grateful to the many industry participants who have shared their time and expertise with us. We appreciate the valuable comments of Josh Lerner, Xibao Li, Ben Jones, Scott Stern, and Adam Jaffe. Pai-Ling Yin and Jason Davis benefitted from the Karl Chang (1965) Innovation Fund and Edward B. Roberts (1957) Fund.