Industry Survey ReportonHong KongMobile Apps Industry

OverviewBackgroundMethodologyIndustry LandscapeTechnologyMarket AnalysisBusiness Model Analysis

Background» The 1st mobile apps industry

survey in Hong Kong

» Present an up-to-date picture of the Hong Kong mobile apps industry

» 100 companies in the mobile apps industry participated in the survey

Methodology

1/ Focus Group 2/ Survey Content Design

3/ Survey Implementation 4/ Survey Report

INDUSTRY LANDSCAPE

Years a Company has been in Business

Over half (55%) of the companies were newly established (1-3 years). Overall, 81% of the companies have been established less than 10 years. The popularity of Smartphone apps facilitated the growth of a new industry.

55%

18%

8%

9%

10%

1-3 years4-6 years7-9 years10-12 years>12 years

Number of Employees

89.9% of the interviewed companies had below 50 staffs. It shows most of the Apps Development Companies are SMEs.

17.2%

42.4%

19.2%

11.1%

3.0%7.1%

1-34-1011-2021-5051-100>100

Person(s)

Yearly Revenue

Over 50% of the companies’ yearly revenue were less than HK$1million, showing that those companies were small business. Meanwhile, there were companies having over HK$20 million yearly revenue, making it a big business.

33.3%

17.8%18.9%

11.1%

5.6%

4.4% 8.9%

<HK$500,000HK$500,000-1,000,000HK$1,000,001-2,000,000HK$2,000,001-5,000,000HK$50,000,001-10,000,000HK$10,000,000-20,000,000>=HK$20,000,000

Mobile Apps Revenue Streams

Pay Per

Download

In-app Purch

ase

Freem

ium

Subscr

iption Fee

Advertisin

g

Commission

Client P

rojec

t/ Contra

ct Deve

lopment

0%

10%

20%

30%

40%

50%

7%

22%

9% 7%13%

6%

41%

012345

Least Important

MostImportant

Reasons for Turning Down a Deal

Lack of manpower (developers) (59%), pricing (72%) and customers’ requirements (49%) were the main reasons for the companies to turn down a deal.

Lack

of Manpower (

Developers)

Lack

of Manpower (

Project Managers)

Pricing

Lack

of Tech

nological S

upport

Legal Is

sues

Customer

Politica

l Issues

0%

20%

40%

60%

80%59.0%

23.0%

72.0%

23.0%9.0%

49.0%

5.0%

Reasons for the Founder to Start a Business

Most of the founders formed their new companies with the goal to own their brands / products (41%). They also incline to enjoy the freedom (36%) obtained in their own business.

Freedom

Higher Inco

me

Government S

upport fot S

tartups

Own brand/products

Low Entry

Barriers

0%

10%

20%

30%

40%

50%

36.0%

18.0% 17.0%

41.0%

16.0%

Funding Source

Over half (58%) of the interviewed companies were self-funded at the beginning of the business.

11.6%

58.1%

11.6%

3.5%

15.1%

Angel/Venture CapitalSelfFamily/FriendsBank FinancingGovernment Schemes

How old was the Founder?

87.3% of the founders were aged below 40, showing that this industry was in the hand of the young people.

3.6%

16.4%

32.7%

34.5%

12.7%

<2021-2425-2930-39>=40

Age

Company Expenses8.5%

4.3%

13.8%

12.8%60.6%

Staff Costs

11-20%21-30%31-40%41-50%>50%

61% of the companies spent over half of the revenue on staff. The costs of staff occupied a significant part of the company’s expenses.

Company Expenses

14.1%

30.4%

28.3%

14.1%

9.8%

1.1%2.2%

Rent

13.5%

64.0%

14.6%

4.5% 1.1% 2.2%

Utilities & Equipment

0%1-10%11-20%21-30%31-40%41-50%>50%

As some of the interviewed companies joined the incubation programs offered by different organizations, many of them had relatively less burden on rental and utilities & equipment.

Company Expenses5.4%

46.2%

23.7%

11.8%

6.5%5.4% 1.1%

Promotion & Marketing

0%1-10%11-20%21-30%31-40%41-50%>50%

Unlike other industries, the interviewed companies spent relatively low portion of their revenue on promotion and marketing. It may due to the nature and ecosystem of the business.

TECHNOLOGY

Technologies Used in Mobile Apps Last Year

Mobile Apps Companies in HK made use of a wide range of technologies on the Apps they developed. Among them, LBS, BLE and AR are the most popular ones.

Near Field Communica

tion (NFC

)

Bluetooth Low Energy (

BLE)

Ultrasound

Augmented Reality (A

R)

Loca

tion-based Servi

ces (

LBS)

0%

20%

40%

60%

80%

23%31%

14%

32%

58%

Product Development Time

Half of the interviewed developers took only 1-3 months for developing an app.

4%

50%39%

7%

1-4 weeks1-3 months4-12 months>1 year

Development Platforms / Tools in Use

Antenna Mobility Platform (AMP)Dojo Mobile

KonyMobileSmith

MoSyncJoyent

StackMobVerivo

Ansca Mobile Corona SDKAppcelerator Titanium

HerokuIBM Worklight

ParseRackspaceappMobi

Windows AzureRed Hat

PhoneGapUnity

Google App EnginejQuery Mobile

Amazon Web Services

1.0%1.0%1.0%1.0%1.0%

2.0%2.0%2.0%

3.0%4.0%4.0%4.0%

6.0%8.0%

10.0%12.0%

13.0%18.0%

27.0%31.0%

35.0%47.0%

Third-party APIs Used in Mobile Apps

Developers made use of thirty-party APIs to make the mobile apps more functional. In the survey, 67% interviewees connected their apps to analytics & 62% connected to social media.

Analytics

Geo/

Points-of-In

terest (POI)

Monetization

(ads, in-app purch

ases etc.

)

Payments

Push/SMS

Socia

l0%

20%

40%

60%

80%67%

32% 32%

52% 48%

62%

MARKET ANALYSIS

Most Popular App Platform

The current app market in Hong Kong was almost equally shared by iOS and Android mobile platforms while in the expected future the app market on Android would keep its share but that on iOS would be taken by other platforms such as HTML5.

38%

43%

2%1% 17%

Expected Future

iOS

Android

Windows Phone

BlackBerry

HTML5

46%

42%

1%2%

10%

Current

Geographical Focus of the Companies

Most of the interviewed companies focused on developing the market in Hong Kong.Not much resources was put to develop the market in mainland China and overseas; but it could be seen that developers were more inclined to work on the overseas market instead of the mainland China one.

Hong Kong Mainland China Overseas0%

10%

20%

30%

40%

50%

0%1-20%21-40%41-60%61-80%81-100%

Attempts to Enter Domestic Market of Mainland China

With the growth of Mainland market, 28% of interviewees had entered the domestic market and 24% of them were still in operation. Besides, 34% interviewees were planning to enter the domestic market.

24.2%

4.0%

34.3%

37.4%Yes, still in operation

Yes, operation terminated

No, but planning to

No, with no plans yet

Problems Encountered in the Domestic Market of Mainland China

Among the companies which had made attempts in entering the domestic market of mainland China, over 45% of them were worried about the plagiarism issues. Meanwhile, they also faced difficulties in applying for licenses and found IP protection insufficient.

Paymen

t Dela

ys

Difficu

lties in Applyi

ng for V

arious L

icenses

Plagiar

ism

Certificati

on Problems

Insufficie

nt IP Protec

tion0%

10%20%30%40%50%

28.6%

42.9% 46.4%

17.9%

42.9%

RECOMMENDATIONS

Areas for More Government Support

Policy

Funding for starting businesses

Education

Funding for training

Funding for entering international awards/competitions

Promotion

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

54321

Sufficient

Insufficient

Recommendations

Policies Education

Talents Capital Branding/Promotion

RecommendationsKey Findings Majority of the companies focuses business on

Client Projects Product Development

Recommendations Develop business partners to widen the

customer base Enter the market of mainland China WTIA’s “Made in Hong Kong” Smartphone App

Gallery

“Made in Hong Kong”Smartphone App Gallery

“Made in Hong Kong” Smartphone Application Gallery 500 local developed app will be recruited Showcase outstanding local apps

Hold seminars and Join ICT Expos in China Promote the platform in both Hong Kong and China

Organize business networking sessions Help Hong Kong app developers meet with potential partners in

mainland China

Conduct training courses Equip app developers with knowledge of the Mainland market

Produce guidelines Accessible for the public

End of Report