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Building an app sector here: Yep, there are developers for that

1/15/2010 by Frank Vinluan, Triangle Business Journal

RALEIGH – The Triangle, long regarded as a technology hub, is adding another spoke as a center for mobile applications developers.

Raleigh’s iPhone App Developers group is the third largest such group in the country, according to social networking site The 171 members in the Raleigh group are fewer only than the 519 in Silicon Valley and the 413 in Atlanta.

The community of mobile app, or application, developers follows the burgeoning growth of Apple iPhone users and the sale and distribution of apps through Apple’s online store, which launched in the summer of 2008.

ABI Research projects that by 2015, more than 240 million business customers will be accessing services and applications through mobile devices in what is estimated to become a $5.2 billion market.

Durham firm Modality is one of the more prolific Triangle mobile app companies to date. The company establishes relationships with publishers and turns printed material into mobile content for the iPhone and iPod Touch. Founded in 2006, the company has created 126 apps, most of them falling into the education category.

Companies angling to play in the app market are still small operations. Developers get 70 percent of the retail price of a mobile app. So, an app that costs $1.99 to an iPhone customer, is generating about $1.40 for the developer. Apple keeps the rest. Even the most successful mobile applications reach only about 1 percent of the market because most developers choose specific platforms to release their mobile application.

But make no mistake, there is a lot of money out there if a developer gets lucky and the app goes viral. On Christmas Day alone, New York developer Freeverse sold more than 80,000 copies of its iPhone games through downloads at about $2.99 apiece. Another New York app development company called Lima Sky sold almost 200,000 copies between Dec. 23 and Dec. 27 at 99 cents per download.

Among local developers, Raleigh’s Ethan Nicholas arguably is one of the biggest success stories. His iShoot application, a tank artillary game, netted him some $600,000 in one month last year.Karen Jirak, who works full time at EMC in Research Triangle Park, founded app development firm Bee Appi last summer. The company’s word game Cyber Word became a top seller on the Apple app store shortly after its October launch.

Jirak says Bee Appi is lean. The four employees work from home. Cyber Word was developed during many long nights when Jirak wasn’t at EMC. But she says her small company was able to reach users through Apple’s online store.

The app store makes it easier for developers to reach users, says Rob Terrell, founder of Raleigh firm TouchCentric. The store was intended to cut out the middle man in bringing products to market. Developers sell directly to consumers through the store. Apple receives a cut.

But the store’s growing popularity – Apple now boasts more than 100,000 apps available for the iPhone – makes for an increasingly crowded field that’s more and more difficult to crack.

“It’s not, ‘if you build it, they will come,” Terrell says. “That doesn’t happen anymore.” Dathan Kazsuk Triangle developers, from left, Dawson Roark, Karen Jirak and Rob Terrell show off their apps.

Terrell found success by getting into the app store early. He developed a gaming app in 2007, well before Apple released software development information for the iPhone in 2008. The app quickly climbed into the top 25 in the games category. In order to crack the top 25, Terrell’s game had to have been downloaded at least 300 times every day for about $2.99 per download. He has since developed apps for television stations, including WRAL-TV.

The app store lists only the top 100 apps in any category. Good apps get overlooked if they’re not ranked, says Dawson Roark, founder of Raleigh company Decode Solutions, which helps app developers research and market their apps. Roark says successful apps fill some need. Businesses are looking for apps that help their employees handle data from remote locations or communicate through social networking.

Jirak says she is considering developing products for Google’s Android platform, a competitor to the iPhone. Terrell says that regardless of the platform, even the best app is no guarantee of success. “Apps don’t sink or swim based solely on the quality of the app itself,” he says.