Freemium App Developers Will Need Speed and Stamina - Mobile World Live

Freemium App Developers Will Need Speed and Stamina

08 SEP 2010

How much should app developers give away for nothing?

On a recent cycle ride on the North Downs in southern England, I travelled 14 miles, climbed 245 yards and burned 691 calories in 68 minutes. I know all this because CardioTrainer, a free fitness app for Android smartphones, monitored my ride from start to finish. Packed with features, CardioTrainer is a well-designed, easy-to-use app and, best of all, it is free.

The rich functionality that WorkSmart Labs Inc. of New York gives away for nothing in CardioTrainer highlights both the extreme levels of competition in the smartphone apps market and the patient, brand-building strategies being pursued by many small developers. CardioTrainer is ranked fourth in the table of top free health apps on Android Market. Not far behind is RunKeeper Free, which also promises to track your fitness activities. Further down the table are Edomondo Sports Tracker, JogTracker and iMapMyRUN, which also offer to monitor your workouts. They can all be downloaded for nothing, although iMapMyRUN says it is free for a limited time.

Like Twitter, Facebook and others before them, these companies’ focus right now is probably on accumulating users rather than profits. Which of them can attract enough users now to survive in the long run will likely depend on how much funding they can secure at this crucial stage in their development. WorkSmart’s web site says it is “currently seeking angel and early-stage venture capital funding. We have successfully raised several rounds of seed funding already, and would like to continue to build on this success.”

Wooing investors

So, what can WorkSmart, which is run by serial Korean entrepreneur Saeju Jeong, offer to whet the appetite of investors? Although CardioTrainer claims to have more than one million users, it isn’t trying to attract advertisers. Instead, WorkSmart is pursuing the so-called freemium business model, in which the basic app is given away for nothing in the hope that customers will then pay to upgrade it to a more feature-rich version. In response to emailed questions, Charlie Sneath, director of communications of WorkSmart, says: “We are not interested in displaying adds inside the application…… by offering CardioTrainer for free, we have a place to showcase and sell premium modules that add features to the basic CardioTrainer product.”

The problem is that the basic CardioTrainer product is very good and, for a moderate fitness enthusiast, like myself, more than adequate. As well as showing your exact route on a Google map, recording your maximum speed, your average speed and your minimum speed, the free version even shows you a graph plotting your speed across every minute of your workout. In the history section of the app, you can add notes, post your workouts to Facebook and even check out where you stand in the “World High Scores” table.

In an apparent attempt to drum up more sales, CardioTrainer has just begun offering free week-long trials of its premium modules, which include the $3 “Weight Loss Trainer” and the $3 “Race Against Yourself” enhancements. Sneath declined to say how many of CardioTrainer’s users have purchased these premium modules, but I suspect only a small proportion have gone to the effort and expense because the basic product is so good.

Pedalling down the streets of Paris

As you would expect, WorkSmart appears to be working on further enhancements, particularly around the integration of entertainment and fitness, which it may plan to charge for. Its web site says: “We have invested some serious time to do market analysis and create innovations that make this effort different. Just imagine pedalling down the real streets of Paris, racing against your friends from all over the world! Stay tuned.”

In the meantime, one way for CardioTrainer to boost its revenues would be to build a database tracking the workout habits of more than a million people around the world. Even in an aggregate, anonymised form that data could be useful to manufacturers of running shoes, bikes, sports drinks and other products. But WorkSmart clearly isn’t the only company capable of collecting such data and the times and location of fitness workouts, which typically don’t involve shopping, probably aren’t valuable enough to earn big bucks.

Although it professes not to be interested in advertising, CardioTrainer could potentially gather a lot of personal information that could be used to provide highly-targeted advertising in future. In an update this month, the CardioTrainer app introduced permanent accounts which enable users to connect their CardioTrainer data with their Google account – such accounts should give WorkSmart a more complete picture of who its users are.

If selling premium modules fails to generate enough revenue, I suspect selling personalised advertising could become plan B, followed by a possible acquisition by Google or another major player in the mobile advertising market. After all, these workout apps are a natural fit with Google’s growing body of location-based services and with its health management service Google Health.

In other words, profits today may be far less important than a trade sale tomorrow.

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