The Web's Death has been Greatly Exaggerated

Over the past several years, developers and pundits started buzzing about users' shift from mobile to desktop.  And they have good reason to think this way: smartphone shipments are hundreds of millions of units per quarter, a majority of the world's population has access to one, and mobile now accounts for more web usage than desktop.  With both the potential upsize of getting a smartphone in billions of new hands over the next few years, and the rapid overtaking of desktop web usage and PC shipments, how could observers not think that "Mobile is eating the world"?

Many believe this to be a troubling trend for the "open web": users are spending 86% of their time in native apps, and only 14% in mobile web.  Native apps are considered "walled gardens" in that they can't typically be crawled by third parties, like search applications, and the data you generate in them is not typically discoverable outside of the app.  The app developer has complete control over the data they generate and access to that data.  Good luck Googling on your phone for your Instagram photos or your Uber history -- it even sounds silly.

Simultaneously, there's been a rush for developers to make all kinds of apps.  These are developers that could have been out developing innovative web applications but chose to make mobile apps instead.  Many theories persist as to why they choose to make mobile apps instead of web apps, all of which may have a grain of truth:

• Mobile apps have a built-in monetization method (users are 'conditioned' to pay for apps)
• Mobile apps have native UI toolkits that make them look much slicker
• IDEs and tooling around web application development are sub-par compared to Xcode 
• Javascript and CSS are really hard.  Objective-C, C/++ and Java are easier (related to #3)

This is also very concerning to the "open web": if fewer developers are developing compelling things on the web because they're making walled garden native apps, won't the web wither and die from a lack of innovation?  Isn't the web dying because of the fundamental shift to mobile, and more specifically, mobile apps?

What Are Users Doing In Apps That Is So Valuable?

Let's look at the data to see if the web is really dying.  First, what apps are users using?  Per Flurry's analysis, this is where they spend their time:

source

Let's break it down in terms of where developers are spending their time:

• Games.  There's enough to talk about in games, it has its own section below.
• Facebook --  There are only so many developers working on this app, and they all work at Facebook.  It would be great if the data were open, but it's not a stretch to imagine why it is not.
• Social Messaging -- people texting each other, sending each other short videos or self-destructing images.  Maybe these could have been developed on the web...as valuable as it is for the open web to have access to everyone's "lol"s and poop emojis.
• Twitter, YouTube, News -- almost all have web equivalents that are "open".  Except in Spain. 
• Utilities -- Flashlights and data usage counters.  Web equivalents of these probably don't make sense to build in the first place, but never say never.

Is there anything that the web is really missing here?  It's possible that instead of spending time making web access points for data really shine, developers are spending time making the mobile apps shine.  However, that's not where users are spending their time.

Maybe that was just a misleading chart.  Instead of looking at people's time spent, look at the top Apps by users in the US:

source

• 15 of the top 25 apps are owned by four companies.  (Oh, Snapchat -- maybe you could have been #16.)   8 of the apps are provided by the platform owners Google and Apple.
• 21 of the top 25 apps have web equivalents that are just another face on the same set of underlying data -- data which is arguably the value to the user, not the app "shell" itself.
• 24 of the top 25 apps are free.  Technically, the Netflix app is free but really requires a subscription, so I didn't count it as free.  It's totally worth it though -- if you haven't seen House of Cards, it's worth every single cent of your subscription.

Most of the top apps, and apps where users spend the most time, are just another view of data already available on the web in some form.  Moreover, most of the top apps are built and controlled by a small number of large tech companies -- those companies developing these apps is not likely to present an opportunity cost to the web, because they also have a large number of developers also working on web applications.  Perhaps those efforts could have been focused on really making the web version better, but are any of them in a terrible state of disrepair?  

Every one of these apps is free, which flies in the face of the conventional thinking that users are ok paying for apps.  When taken by time used, games, Facebook, social messaging (mostly), YouTube,  Twitter, and news apps are all free (with ads) or make their money off of freemium models.  Users are spending all of their time in free apps!  Guess what else is mostly free, freemium, or ad-supported?  The web.

What About Games?

Games, which constitute the largest chunk of mobile users' time, are obviously a draw for app developers.  Of the roughly 1 million live apps in the App Store, 21% are games.  What's up with so many games, and why do so many get created every month?

A few hypotheses:

• Games are fun for developers to make, more so than another calculator app.
• Several high profile mobile game companies got popular fast and had very large exits -- get a few hundred thousand users and then get bought out.
• People love wasting time on their phone, as evidenced by spending 32% of their time doing so.

Most games are freemium -- very few are paid up front.  They often rely on addictive progression, coupled with social sharing components to get "whales" addicted and shelling out big bucks to get ahead.  In the meantime, the other 98.5% of users get advertising, commonly a very effective kind of advertising called "cost per install" (CPI) advertising.  In CPI, app creator A pays app creator B for every user who clicks one of their ads and installs their app.  CPI is known to be very financially beneficial for the publisher (but only so-so for the advertiser) because even though they set their own install price target, the users they get this way don't stick around and become whales.  So the advertiser has to cram in more ads into their own app to increase lifetime customer value and make the install price worth it.

What does this lead to?  Free games that have CPI ads for other free games -- that have CPI ads for other free games -- etc.  A bunch of money going around in a circle.

Regardless of how un-sustainable that monetization model sounds, how big of a loss is it that the information contained within these games isn't openly accessible?  Arguably, the data within games has some tiny smidgeon of value, and it would be great if the open web could find and discover that.  However, does not having your high scores in Angry Birds be searchable online going to be the nail in the coffin of the web?

Picks and Shovels

There is a famous investing adage that, during the California gold rush of 1849, none of the prospectors who went hunting for gold got rich.  However, people who sold them picks, shovels, blue jeans, and chocolate did get rich.

Mobile apps are having their gold rush -- if a relatively simple flashlight utility app becomes the top popular install, the developer could put a bunch of ads on it and make a decent amount of money.  However, there's only going to be one most popular flashlight app, and one most popular calculator, and one Facebook.  It's reasonable to think that there are some innovative, unique app opportunities not already taken -- but many of the opportunities are.   The marketplaces are entirely owned and controlled by large tech companies: they are the pick and shovel makers, who also happen to be putting big bets on the web.

The shift to mobile is a fundamental change in how users access information, communicate, and spend their spare brain cycles.  Its rise has been meteoric, and anyone who does not respond will certainly be lapped by competitors.  However, the rise of mobile usage has not been to the detriment of desktop usage.

Declaring the web as "dying" is silly -- developers are making free apps for convenience or to fill time, and take advantage of being anywhere -- not replacing what people normally do on laptops or desktops (try to write a book on a phone.)  Once the gold rush of app development is over, the smoke will clear and valuations of mobile apps will come back to Earth.  Would it be better for the open web for all developers to be developing web apps and not mobile apps?  Of course.  But the mobile apps they are building are not apps that make sense for the web, and often have data that isn't that useful or is already available on the web.

Maybe mobile will kill the web at some point in the future -- never say never -- but it hasn't killed it yet.