Economy likely to stall new enterprise mobile apps

The economic downturn will probably slow down the development of new mobile enterprise applications, even as changes in the mobile industry are making it easier for developers, said executives at a mobile conference in Seattle on Monday.

Even though the struggling economy will likely slow down the use of mobile-phone services, application developers are still more likely to target consumers than businesses, they said.

"I don't think people will spend more money on phones, I don't think they'll buy more games," said Tom Huseby, managing partner of SeaPoint Ventures, speaking during the keynote presentation at Mobile Northwest, a small conference primarily for mobile startup companies in the Pacific Northwest.

But even if people don't buy new phones or games, they are unlikely to fully get rid of their phones. "We're fortunate to be in an industry during this time where consumers will continue to have a 'share of wallet' for wireless," said Venetia Espinoza, director of mobile applications and partner programs at T-Mobile, by which she means that people will make sure they budget for their phones. She recently spent a day working in a T-Mobile retail store, where she heard customers say that they were more likely to cut their landline phones or even cable TV before getting rid of their cell phones.

While the same is likely true for enterprises--businesses probably aren't going to cut off their budgets for mobile phones--they won't likely expand the use of mobile phones through new applications.

While social-networking applications, for example, lend themselves quite well to business users, it's more difficult to approach businesses compared to consumers, said Peter Claasen, vice president of business development at Ontela, a company that lets users automatically upload photos from their phones to a Web site. "We don't target the enterprise, but we've thought about it a lot and I think it's ripe," he said. However, offering service to consumers through an operator has the potential to address far more users than approaching individual enterprises, he said. That makes the enterprise market a lower priority.

Huseby agreed that startup companies have found it difficult to approach IT or telecom groups within enterprises. "In general I don't find the value proposition that can break down those barriers fast enough. It's very hard for startups," he said. Larger IT vendors like Microsoft, Oracle or SAP have better luck because they can sell wireless products as a value add in addition to other contracts they might have with an enterprise, he said.

Business applications typically have to address data security issues and so may not be able to take advantage of a new trend in mobile application development that is helping the consumer application developers, despite the economic downturn. Historically, only a very small percentage of phone users ever downloaded new applications to their phones. That meant application developers would have to work through an often-painful process of trying to convince mobile operators to load their applications on phones before they hit the market.

That changed with the iPhone and its App Store, where users of the phone can find and download applications. "Everyone is going to have an App Store," said Brent Brookler, CEO of Treemo, a social network that lets people share videos and photos on their mobile phones. He noted that Google's Android phones will connect to a market for applications and BlackBerry has announced plans to launch an application store. "The traffic we're seeing through this distribution is really pretty amazing," he said of Treemo's experience over the past month after offering its application through the iPhone App store.

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Copyright © 2008 IDG Communications, Inc.

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