Billion Dollar Apps

Billion Dollar Apps: 3 Industries That Are Toast Thanks to Mobile

November 6, 2012

  • Alex Bratton

The following is an excerpt from Alex Bratton’s upcoming book, Billion Dollar Apps.

Mobile technology is driving innovation and provoking reinvention in many industries. Other industries are finding themselves completely disrupted, and in many cases, those companies have yet to realize they’re in big trouble.

Businesses that provide specialized hardware and gadgets are in danger of going the way of the dinosaurs – extinct. They are being rapidly replaced with apps on mobile devices.

#1  Point of Sale (POS) Systems

Retail point of sale systems (POS) are composed of specialized, often expensive, hardware for taking cash or credit card payments. POS systems are set in fixed locations (at the counter), don’t offer much in the way of innovative features, and can now easily be replaced with mobile platforms and applications. Toshiba Tec Corp is acquiring IBM’s POS business for $850 million. Great for IBM to exit the POS business, not so great for Toshiba.

Companies providing POS systems will be completely disrupted by mobile technology if they are not replacing their traditional offerings with mobile immediately.  Apple pioneered easy to use mobile technologies in their stores and has been a driver in completely removing traditional registers from the retail environment. This puts retail sales people out on the floor with customers for more direct interaction. Many other organizations, like OfficeMax, are following Apple’s lead.

OfficeMax is reaching technology obsolescence with their current traditional POS platforms and are making the leap to a purely mobile environment, skipping the expensive upgrades to bulky, stationary equipment. OfficeMax will replace aging registers with mobile tablets, allowing both POS functions and the flexibility to perform other business functions, such as inventory search.

The adjacent industry of systems integrators who sell and install POS systems will see a similar challenge as their customers turn to mobile technology that is often readily available directly from suppliers. Innovative integrators will get ahead of this curve by rolling out value added services around mobile payment systems, such as training and data integration with existing back end systems.

#2 Speech Augmentation Devices

Two years ago I met an organization in the speech augmentation market. They sold specialized gadgets which allow people with a variety of speech challenges to use a device to speak for them. These devices are proprietary and very expensive.

Unfortunately, their world view was that apps and mobile phones could never replace the rich audio experience they gave their customers. They needed to reinvent themselves, but had their heads in the sand with a belief mobile tech wasn’t viable or competitive.

The capabilities of those multi-thousand dollar devices are now available as apps on phones that cost less than 1/10th the price, are always in their owners’ pockets, and have much broader capabilities. What could have been a leadership position servicing their market has become a fight for survival against new mobile app competitors.

#3 Portable Gaming Devices

Nintendo has long dominated the handheld gaming space but should be terrified at the massive influx of iPod touches and mobile phones that have become very capable game platforms. The price points of the games are significantly less than the traditional ‘cartridge’ based alternatives and because mobile devices have much broader capabilities, those same users (young and old alike) are now tapping into games right along side of their email and social networking tools.

Nearly any capable developer can create an iOS or Android game and control getting their game to market. Working with traditional game platforms requires significantly more time and lots of hurdles to release a title. A big driver in mobile platform success is the ability to attract those developers, something that iOS and Android have in much more significant numbers than the select few partners approved to build traditional games. While there are around 1,000 titles available for the Nintendo DS, there are over 100,000 games available on mobile platforms.

Mobile platforms have also brought game play to a new audience – casual gamers. The popularity of puzzle, word, and other social games has exploded in the past 3 years, making giants of a number of brand new gaming companies. Casual games, combined with the instant gratification of immediate download of that next great game, have brought games to the mainstream.

Bottom line, organizations in industries like these need to be focused on reinventing themselves to take advantage of the mobile wave or be crushed by it. Giants (big established brands) embracing mobile to extend their offerings will be able to leverage both their existing products/services and new mobile capabilities their customers demand.

Those companies asleep at the wheel won’t see their industries changing directions completely. They will end up in even worse shape than some of the giants we have all seen stumble and fall in less than 24 months – a pattern in the mobile handset market now propagating to other industries.

Innovate or die — or in today’s market, mobilize or die.

Stay tuned for additional excerpts from Billion Dollar Apps.