The Custom App vs SDK duel is on!
The year 2015 marked the end of the fundamental shift in the balance of power for developers.
We are in the midst of two mega-trends and a turning point in the cycle.
First, Software Development Kits (SDKs) are becoming more mature and replacing the need for custom development on mobile. There is still custom development. But like in a car that gets more and more computers, the app gets more SDK and less custom code. Second, the cat is presented as the app killer. Conversational commerce is already upon us in Asia. It’s only a matter of time before the West realizes it too. Appas a container will become the browser for the chat, which will then replace what we now call an “application”.
The euphoria in the startup ecosystem turns into nervous whispers about profitability and the unit economy. Many hobbyists and small startups / businesses trying to get on the app train will either wait to see how things go or spend less. As such, the average American does not download any apps every month!
To support our observations, a survey of over 500 companies showed us that there is a decline in the small business customer base of application developers, in terms of revenue and value per project. Small businesses are already spending less on custom app development and more on SDKs and white label products. The “Uber for X” dream is still alive.
Meanwhile, after eight years, we could say that companies are decisively deploying applications at scale, after a few years of testing. Mature application development agencies will continue to thrive on such demand. We will see several mergers and acquisitions deals in the mid-market through large systems integrators acquiring niche mobile agencies to meet business demand.
Micro-service integration and enterprise problem solving will save agencies
Where does the onslaught of the SDK leave custom app developers?
Micro-services integration: SDKs are there, but someone needs to put them together. The business landscape is even more complex. Application development agencies developing specialist capabilities around integration, application performance management, security, and operations will have a great time in 2016 and 2017.
Application development becomes a commodity, but the know-how to run an application business is not. This is where app developers can build their sustainable competitive divide.
Between 70% and 80% of the companies surveyed indicated their intention to retain an agency for deployment, scaling and management of applications. User analysis and application analysis are other areas where demand far exceeds the supply of specialist agencies. We said that in early 2015, application development agencies that grow into full-service application management consulting firms will survive and evolve.
Rates are holding up for now
Application development rates have remained stable around the world. The United States and Western Europe have the highest hourly rates. Continental and Eastern Europe, as well as India, impose premium low-cost country tariffs. New supply markets like Indonesia, Vietnam etc. are cheaper bases supplying mainly Chinese and Singaporean demand.
An exception to this trend is that super-specialized development agencies that specialize in creating SDKs or have very popular apps / games in their wallet have been able to increase their premium. We have seen a 10 to 20 percent increase in the highest rates. We have seen more and more agencies billing over $ 175 an hour in the United States, $ 40 an hour in India, and $ 60 an hour in Eastern Europe. These are agencies that started out as app developers and have since grown into full-service consulting companies.
For a detailed overview of pricing in regions for mobile and modern web frameworks, download ‘Makers Speak 2016 report‘
The purchasing behavior around SDKs has some surprises in store
If you had blinked, you would have missed out on acquiring Get the app (a review site primarily focused on applications and SDKs) by Gartner (a predominantly enterprise technology analysis company). This movement is an indicator of the turn towards SDKs and white labels that are taking hold in the company.
Features, scalability, ease of use, and integration are the most important criteria when it comes to choosing an SDK. In the absence of clear winners in many categories and an evolving development landscape, decisions about SDKs are made from a “product roadmap” and “technology” perspective rather than from a “product roadmap” perspective. “Advertisements” and the “brand”. Facebook’s recent shutdown of Parse is said to increase the buying community’s preference for independent tool makers with a strong product vision.
To sum up, 2016 will be the year we see a decisive shift in apps towards new models of mobile interactions like chat. It will also be a pivotal year for SDK and SaaS companies, which will consolidate the ground they have gained from outsourcing agencies.
Enterprise application development and micro-service integrations can continue to fuel the coffers of application development agencies that are in the mid-market space. For the little ones who mainly depend on startups, we are past the euphoric period.
If you are interested in the details, you can download the free report (The creators speak 2016) of ContractIQ.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)