Smartphone Apps on the Mobile Web: An Exploratory Case Study of Business Models

Abstract

The purpose of this research is to explore the business strategies of a firm seeking to develop and profitably market a mobile smartphone application (‘app’) to understand how small, digital entrepreneurships may build sustainable business models given substantial market barriers. The case study describes two distinctly different business models adopted in succession by one firm attempting to successfully commercialize its mobile app, as well as the various adjustments the firm makes to three key business model mechanisms: 1) its value proposition to the selected target market 2) its value chain configuration and 3) its customer acquisition cost structure. This research looks closely at business-to-consumer (B2C) and business-to-business-to-consumer (B2B2C) distribution arrangements for mobile apps and in doing so challenges the rising positive bias that exists for the app store as the dominant actor in the mobile value chain. This research extends earlier frameworks of ebusiness model value derivation by suggesting new contingency aspects found in the mobile application development sector. For practice, this research suggests business model viability in the mobile sector may be closely related to decisions in targeting, value chain configuration and use of mobile advertising. As strategic uncertainties are a common situation in emerging industries, this paper offers practical strategy tips to improve business model sustainability and may be useful to start-ups, digital entrepreneurships, developer communities or others seeking to profit from the global smartphone diffusion.